MARKET CLOSE: NZ shares edge lower, led by Freightways on outlook; Steel & Tube gains

Monday 22nd February 2016

New Zealand shares slipped, led by Freightways on its grimmer outlook for the second half of the year, while Steel & Tube Holdings continued to rise.

The S&P/NZX 50 Index decreased 2.2 points, or 0.04 percent, to 6139.47. Within the index, 26 stocks fell, 14 rose and 10 were unchanged. Turnover was $143.5 million.

Freightways led the index lower, dropping 2.7 percent to $6.05. The courier and logistics business posted a 5.5 percent gain in first-half profit on strong earnings from its information management division in New Zealand and Australia, but warned conditions will be challenging in the second half, given the current volatility in markets and the dairy downturn taking money out of the New Zealand economy and denting confidence.

"It's normally a bit of a bellwether to the underlying New Zealand economy," said Rickey Ward, New Zealand equity manager at JBWere. "The result was on the slightly disappointing side, depending which analysts you talk to, but it's more about the outlook comments. It's a company that's leveraged to an underlying economy which we believe is going okay. The share price got a little bit ahead of itself on the expectation that negativity wouldn't be the case, and it's peeled off a bit today."

MightyRiverPower shed 2 percent to $2.65 ahead of its first-half result tomorrow, while Orion Health Group declined 1.8 percent to $2.70.

Chorus fell 1.8 percent to $3.89. The shares rose 5 percent on Friday after the company said it will start paying dividends again. Chorus today got an upgrade to its credit rating from Moody's Investors Service on its plans to stick to existing capital management policies and the regulatory relief it from the Commerce Commission last year.

Trade Me Group dropped 1.6 percent to $4.19, Kathmandu Holdings lost 1.3 percent to $1.50, and Port of Tauranga fell 1.1 percent to $17.80.

Steel & Tube Holdings was the biggest gainer on the index, up 3.6 percent to $2.30, a six-week high. The NZX-listed steel products distributor's shares began rising last Thursday when the company announced it had lifted first-half profit 47 percent, and have gained 13 percent over three days.

"It beat most people's expectations," Ward said. Separately, ASX-listed BlueScope Steel, which owns New Zealand Steel, today reported a more than doubling in first-half profit, which Ward said indicated the broader steel industry was "a sector that's going okay."

SkyCity Entertainment Group rose 2.3 percent to $4.49, with Fisher & Paykel Healthcare up 2.2 percent to $8.99. Westpac Banking Corp gained 1.3 percent to $32.30.

Outside the benchmark index, Colonial Motor Co rose 0.7 percent to $5.46. The listed motor vehicle distributor lifted first-half profit 24 percent, benefitting from New Zealand's record new vehicle market and the sale of a Wellington property.

BusinessDesk.co.nz

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