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NZX CLOSE: NZ shares fall; NZX drops on TZ1, Freightways down after earnings

Monday 15th February 2010

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New Zealand shares fell, led by NZX Ltd. after the market operator took an accounting charge against payments from its TZ1 carbon registry, and Freightways Ltd. fell after lowering its dividend and posting first-half earnings that missed some forecasts.

The NZX 50 Index declined 20.94, or 0.7%, to 3059.53, the lowest close since late August. Within the index, 25 stocks fell, nine rose and 15 were unchanged. Turnover was $54.2 million, with trading subdued ahead of the U.S. holiday to commemorate George Washington’s birthday.

NZX (NZX: NZX ) dropped 8.7% to $1.99, the lowest close since April last year. Today, the company said a drop in participation in carbon trading forced it to reduce the carrying value of its shares in Markit, which it got for selling its TZ1 registry, by $19.9 million.

“With everybody not trading credits then their volumes have dropped away – that filters through to what NZX gets in its back pocket,” said Craig Brown, who helps oversee $3.3 billion at ING New Zealand.

Freightways (NZX: FRE ), the owner of courier brands including New Zealand Couriers, Post Haste and SUB60, fell 4.7% to $3.06 after posting a 14% decline in first-half earnings and saying it expects a gradual pick-up as the domestic economy improves. The company trimmed its first-half dividend by 1 cent to 7 cents and refrained from giving a forecast for the second half.

So far this earnings season, companies including Telecom Corp. and Steel & Tube Holdings have posted deteriorating earnings amid signs the recovery from recession will be slow and patchy.

“Companies are trying to get as much of a positive spin on things as they can but ultimately they are saying it is bloody hard to give any forecasts,” ING’s Brown said. Through the downturn, companies have worked hard to take costs out and are generally “well poised to benefit” from the eventual recovery. But “it hasn’t come through the earnings yet.”

Steel & Tube (NZX: STU ), which supplies steel building products such as reinforcing rods, fell 3.9% to $2.50. last week the company reported an 85% slump in first-half profit, reflecting weaker demand and prices. Sales fell 30%.

PGG Wrightson (NZX: PGW ), the nation’s biggest rural services company, dropped 5% to 57 cents, the lowest since December 1. The company has a management contract with NZ Farming Systems Uruguay, which pays out provided certain earnings targets are met. Farming Systems is due to report its first-half results tomorrow. It may post a narrower operating loss because of improving global dairy prices and better weather. NZ Farming Systems (NZX: NZS ) declined 2.3% to 42 cents.

Auckland International Airport (NZX: AIA ), said on Friday it is heading to the Supreme Court over a claim by the Craigie Trust, a property owner adjacent to the airport, for the return of airport land taken under the Public Works Act. Craigie lost in the Court of Appeal last September and is now seeking leave to appeal to the Supreme Court.

Telecom (NZX: TEL ) rose 0.9% to $2.32. On Friday it posted a 24% slump in earnings, excluding one-off adjustments in 2008, as it failed to grow its revenue while slashing its costs.

Fletcher Building (NZX: FBU ), fell 1.1% to $7.46. Goodman Property Trust (NZX: GMT ) shed 1.9% to $1.01. Pyne Gould (NZX: PGC ) dropped 2.3% to 43 cents.

Port of Tauranga (NZX: POT ) was the biggest gainer today on the NZX 50, rising 2% to $7.20.

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