MARKET CLOSE: NZ shares fall as Warehouse earnings weigh; Genesis, Restaurant Brands gain

Thursday 9th March 2017

New Zealand shares dropped Warehouse Group fell on a slump in first-half earnings and Fletcher Building extended its decline, while Genesis Energy and Restaurant Brands rose.

The S&P/NZX50 Index fell 37.23 points, or 0.5 percent, to 7,140.99. Within the index, 28 stocks dropped, 14 rose and eight were unchanged. Turnover was $152.1 million.

Warehouse Group fell 2.7 percent to $2.50. The retailer reported a 76 percent drop in first-half profit to $13.6 million after it took an impairment charge against its financial services unit, recognised restructuring costs and earned less from its Red Shed department stores. Total sales rose 3.3 percent to $1.6 billion.

"It's clearly a bit weaker than what the market was expecting, more at the revenue line than at the bottom line necessarily," said Rickey Ward, NZ equity manager at JB Were. "It's the confirmation of a very tough consumer sector and a company that has gone backwards a bit, combined with the potential it could be removed from indices - that hasn't helped it on a day that's had negative undertones already."

Fletcher Building dropped 3.4 percent to $9.20. Last month the company posted a 2 percent gain in first-half profit that included unexpectedly weak earnings from its construction division, especially given its $2.7 billion backlog of work, while affirming annual pre-tax earnings guidance of between $720 million and $760 million.

"That's still peeling off, no new news but it appears like a portfolio that's being sold across the board, perhaps international investors trimming New Zealand exposures and moving on," Ward said. "Interest rate sensitive stocks have been out of favour for a while now, maybe it's on the back of that. It wasn't a great result, but it's come off a dollar and then some since that.

"When you look at the first half results, clearly poor, but go and look at the analyst expectations for the second half and not many of them altered their expectations. That's what the company guidance would indicate. Either they've said something on their global roadshow which has spooked some people, or this is thematic oriented."

NZX, which gave up rights to a 3 cent dividend, was the worst performer, down 4.5 percent, or 5 cents, to $1.06.

Sky Network Television fell 2.4 percent to $3.61 and Precinct Properties New Zealand dropped 2.1 percent to $1.185.

Genesis Energy was the best performer, up 2.1 percent to $2.15, while A2 Milk Co rose 2.1 percent to $2.48.

Restaurant Brands New Zealand gained 0.9 percent to $5.44. The fast-food retailer lifted fourth quarter sales 37 percent to $121.6 million, bolstered by gains from its Australian KFC stores. The quarterly gain lifted annual sales 28 percent to $497.2 million.

Outside the benchmark index, NZME dropped 2.4 percent to 83 cents. Fairfax Media says it's looking for a permanent replacement for New Zealand managing director Simon Tong, who has resigned just days before a Commerce Commission ruling on the proposed merger with NZME, a step the media companies say they need to survive a changing industry. The merger decision is due on Wednesday.

BusinessDesk.co.nz

Comments from our readers

No comments yet