MARKET CLOSE: NZ shares fall as A2 Milk disappoints; Skellerup, TradeMe surge

Thursday 20th August 2015

New Zealand shares fell, led by A2 Milk Co after the milk marketer failed to update investors on any takeover action. Skellerup Holdings and Trade Me Group advanced after reporting better than expected full year earnings.

The S&P/NZX 50 Index decreased 7.58 points, or 0.1 percent, to 5742.45. Within the index, 21 stocks fell, 22 rose and seven were unchanged. Turnover was $153 million.

A2 dropped 6.5 percent to 72 cents after the milk marketing company reported an annual loss of $2.09 million, despite a 40 percent gain in revenue, as it invests in overseas expansion and absorbed costs from its ASX listing. Investors were disappointed after the company said there had been no word from Australian-based Freedom Foods and US-based Dean Foods since their expression of interest in taking over the company, which was rejected by the board.

"The big negative for A2 is a bit of a stalemate with the takeover process," said Michael Milne, investment adviser at Craigs Investment Partners. "That's what the market is looking for, some progress on that front, so it's a bit disappointing to see there's no real update on that. The board came out and said the initial expression of interest wasn't compelling, but it's hard to know when the price isn't disclosed."

Skellerup climbed 8.5 percent to $1.28 to be the best performer on the day. The industrial rubber goods maker lifted annual profit 6 percent to $21.9 million, beating expectations, as a focus on the US, China and South American markets offset a downturn in Australia and New Zealand.

"It's been a long time sufferer in terms of market momentum," Milne said. "It was slightly ahead of expectations, but the outlook seems to have improved a wee bit."

Trade Me rose 3.6 percent to $3.21. New Zealand's largest online auction site posted a 2015 profit of $80.2 million largely unchanged from $80.1 million in 2014 as increased spending ate into bigger revenues. Earnings will continue on a similar path this year as it invests in new ventures. The latest profit is ahead of the $79.2 million expected in a Reuters poll of analysts. Revenue rose 11 percent to $199.7 million, while expenses increased 25 percent to $64.5 million.

"It's another share price that has almost been in free fall over the last two months, so even though it was flat it was probably a bit better than a lot of people were expecting," Milne said.

Port of Tauranga fell 1.3 percent to $17.40. The nation's busiest port for export commodities said annual profit growth slowed to 1 percent, with earnings of $79.1 million as log export volumes, which drove growth in 2014, declined, leaving total export volumes unchanged. Revenue growth also stalled.

Genesis Energy gained 0.6 percent to $1.76. The utility company confirmed it will terminate its coal supply contract with state-owned coal miner Solid Energy, which was placed into voluntary administration last week ahead of an attempt to sell its assets over the next 2 1/2 years.

Outside the benchmark index, APN News & Media slumped 30 percent to 64 cents. The Australasian publisher and radio station operator is taking its first step toward a digital subscription model for its New Zealand flagship newspaper, the New Zealand Herald, and plans to roll out registrations on the masthead's website before the end of the year. The company posted a 67 percent slump in first-half profit to A$7.5 million. On the ASX the dual-listed shares fell 13 percent to 57.25 Australian cents in afternoon trading.

South Port New Zealand was unchanged at $4.65. The Bluff port operator lifted annual profit 16 percent to $7.7 million, as stronger cargo flows bolstered the hub's volumes, though the company anticipates the slowing economy will sap earnings in 2016.

Scott Technology was unchanged at $1.33 after the Dunedin-based industrial automation manufacturer said it has received an offer from food processor JBS to merge with the Brazilian company's Australian subsidiary to raise new capital. The proposal would require shareholder approval, and various regulatory sign-offs are expected to take several months to work through.

BusinessDesk.co.nz

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