MARKET CLOSE: Air NZ lifts market higher

Monday 23rd August 2010

New Zealand stocks rose for the third time in four sessions, led by Air New Zealand after Moody’s Investors Service said it would benefit from Virgin Blue’s exit from the domestic market.

The NZX 50 rose 16.3 points, or 0.5%, to 3016.8. Within the index 15 stocks rose, 14 fell and 21 were unchanged. Turnover was $54.8 million.

Air New Zealand (NZX: AIR ) rose 2.5% to $1.22. Virgin Blue’s announcement last week that it would exit New Zealand domestic routes to curb losses will benefit the remaining two airlines plying the trade, Air New Zealand and Qantas, Moody’s said today.

Its departure “will ease what had been cut-rate competition and support the other two carriers’ profitability.”

Telecom (NZX: TEL ) rose 2% to $2.07, having earlier sunk below $2. The nation’s biggest phone company on Friday posted a 2.4% increase in EBITDA on favourable currency movements and intercarrier charges.

“Results from companies have so far been mixed, with the last quarter starting to show some signs of a recovery, and I think the market just took the weekend to digest the news,” Direct Broking senior dealer Karl Willscroft said. Still, “a lot of the reports from brokers have been down beat over the course of the day on stocks like Telecom,” which was rated ‘underperform.’

Sky City (NZX: SKC ) rose 2.5% to $2.92.

Fisher & Paykel Appliances (NZX: FPA ) rose 2% to 52 cents. The company announced earlier at its annual meeting that it would struggle to achieve its guidance for full-year earnings if key markets deteriorate.

Earnings before interest and tax for the appliance business will be at the lower end of the broker consensus range of $45 million to $52 million, while finance EBIT will be at the top end of the $25 million-to-$34 million range.

Allied Farmers (NZX: ALF ) was unchanged at 3 cents after the receivership of its Allied Nationwide on Friday and the announcement today that chairman John Loughlin has resigned.

Allied put its $19.3 million capital raising on hold and pulled a prospectus after Guardian Trust said Nationwide had breached its trust deed.

NZ Farming Systems (NZX: NZS ) was unchanged at 63 cents. The company had earlier reported a lower loss than last year and advised shareholders not to sell to Singapore-based Olam International, saying the offer price is “too low”.

The company said the other suitor for the business, Union Agriculture Group, has advised it intends making a higher offer.

PGG Wrightson (NZX: PGW ), which owns an 11.5% stake Farming Systems, fell 3.7% to 53 cents.

Pyne Gould (NZX: PGC ) fell 4.6% to 42 cents, leading declines on the day.

Westpac (NZX: WBC ) fell 1.9% to $27.80. The company earlier said cash earnings rose 27% to about A$1.4 billion ($1.76 billion) in the June quarter. Last year, it said June quarter cash earnings were about A$1.1 billion. It didn't report net profit for either quarter.

Guinness Peat Group (NZX: GPG ) fell 1.5% to 64 cents, Rakon (NZX: RAK ) fell 0.9% to $1.05, and Steel & Tube (NZX: STU ) fell 0.9 % to $2.20.

Businesswire.co.nz

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