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MARKET CLOSE: NZ shares fall as Mainfreight profit disappoints; Auckland Airport, Freightways drop

Tuesday 10th November 2015

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New Zealand shares fell, led by Mainfreight after the transport and logistics company posted first-half profit that missed some expectations, weighing on other freight-related companies including Freightways, Auckland International Airport and Air New Zealand. A2 Milk Co and Comvita gained. 

The S&P/NZX 50 Index fell 45.09 points, or 0.8 percent, to 6002.8. Within the index, 32 stocks fell, 14 stocks rose, and four were unchanged. Turnover was $138 million.

Mainfreight lead the index down with shares falling 5.63 percent to $15.10. The transport and logistics group said first-half profit fell 2 percent as costs of new transport and logistics facilities at home and weaker trading across the Tasman eroded the benefits of record first-half revenue. Profit fell to $32.9 million in the six months ended Sept. 30, from $33.5 million a year earlier, the Auckland-based company said in a statement. Revenue rose to a record for a first half of $1.1 billion from $987 million. The shares dropped 5.9 percent to $15.05 and earlier touched a three-week low of $15.

"Mainfreight's profit is down beyond what most people expected," said Robert Garden, investment adviser at Craig's Investment Partners. "Margins aren't quite where they have been and there have been some increased costs as they've tried to expand the business."

Other freight and logistics-related company followed Mainfreight lower. also fell. Auckland  Airport fell 2.3 percent to $5.21, Freightways fell 2.3 percent to $5.93, and Air New Zealand fell 4.9 percent to $2.72.

"Mainfreight is a barometer given the type of business they're in for the overall economy," Garden said. "Seeing them weaker casts a bit of a shadow." 

The NZX 50 climbed to a record on Nov. 5 and has since retreated in the absence of news that could drive stock higher and concern global equity markets may face some headwinds.

"We've had a good bounce since the end of September," Garden said. "The NZ market hit all-time highs but I think we're getting doses of reality and suggestions that things are potentially cooling off. There are obviously issues with China, commodity prices over in Australia and what the Fed's going to do with interest rate rises."

Diligent Corp fell 0.8% from $6.02. The governance software developer reported a 38 percent decline in third-quarter profit to US$1.61 million as the firm expanded its sales team and administrative costs rose in the US. Profit was dented by an 89 percent rise in sales and marketing costs to US$6.22 million, and a 51 percent increase in general and administrative expenses to US$7.35 million. That offset a 16 percent gain in sales to US$24.9 million.

A2 Milk was the biggest gainer, rising 5.2 percent to 81 cents. The trans-Tasman dairy company is considering building its own infant formula plant in Australia as it struggles to keep its Platinum-branded product on supermarket shelves. Australia is in the midst of a baby formula shortage following the world's biggest online shopping day, China Single's Day. A2 infant formula sales soared 445 percent to $41.7 million in the 12 months to June 30. 

Comvita shares rose 5.8 percent to $7.35. The manuka honey products maker raised its annual profit guidance after first-half revenue jumped 52 percent, driven by sales in New Zealand, Asia and Australia. The Te Puke-based company turned to a profit of $3.04 million in the six months ended Sept. 30, from a loss of $3.3 million a year earlier. Comvita is now forecasting operating profit of $15 million-to-$17 million for the 12 months ending March 31, 2016, an annual gain of between 46 percent to 65 percent, compared with an earlier forecast gain of 35 percent, said chairman Neil Craig.

"Comvita had some issues last reporting period with insufficient stock levels holding them back but they seem to have got that sorted, they've done really well." Garden said. 

Kathmandu Holdings rose 3.9 percent to $1.59, and Sky Network Television rose almost 2 percent to $4.65.

CBL Corp rose 3.5 percent to $1.80. The newly NZX-listed company that sells credit surety and financial risk insurance, is in talks to buy UK tax investigation insurance provider Professional Fee Protection for an undisclosed sum. Its shares, which were listed last month, are trading ahead of the initial offer price of $1.55.

 

 

 

 

BusinessDesk.co.nz



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