MARKET CLOSE: NZ stocks fall on muted earnings outlook, PGW paces decliners

Thursday 11th November 2010

New Zealand stocks fell for the first time in three sessions after weaker housing data and muted earnings outlooks from local companies. PGG Wrightson paced decliners, while Warehouse rose.

The NZX 50 Index fell 2.38 points, or 0.07%, to 3,331.1. Within the index, 13 stocks fell, 20 rose and 17 were unchanged. Turnover was $136.4 million.

New Zealand's residential house market resumed its slide last month, with sales falling to 3,903 in October from 4,323 a month earlier, more than a third lower than the same month a year ago, according to the Real Estate Institute.

“We’ve had a couple of AGMs pointing to patchy revenue growth, with companies talking about internal improvements rather than real profits coming down the line, which hasn’t helped sentiment,” said Paul Robertshawe, who helps manage $220 million of local equities for Tower Asset Management. “The housing data that was out today was weak, which doesn’t help.”

PGG Wrightson (NZX: PGW ) fell 1.9% to 51 cents, AMP (NZX: AMP ) fell 1.2% to $6.63, and Nuplex (NZX: NPX ) fell 1.2% to $3.40.

Telecom (NZX: TEL ) fell 0.9% to $2.16, easing back after being heavily sold over yesterday on speculation that a local fund manager was looking to lift its stake in the company.

Hellaby (NZX: HBY ) fell 2.5% to $1.95. The company told shareholders at its annual meeting that its trading performance for the first quarter of the new financial year was ahead of the corresponding period last year.

Managing director John Williamson said sales for the quarter ended September 30 were 2.4% ahead of the corresponding period last year. Profit before interest, tax, depreciation and amortisation for the quarter was $3.1 million ahead of last year, with net profit after tax $2.7 million ahead of last year.

Steel & Tube (NZX: STU ) fell 0.4% to $2.39 after the company said demand had softened in October despite an improvement first quarter trading conditions.

Chairman Dean Pritchard told investors at the company’s annual meeting that it was on track to report an improved underlying profit for the six months to December, after net profit plummeted 78% last year in the wake of the financial crisis.

Fletcher Building (NZX: FBU ) fell 1.1% to $8.03.

Rakon (NZX: RAK ) was unchanged at $1.28 after the company said resurgent demand in the technology sector had helped it return to profit.

The Auckland-based company reported a net profit of $5.6 million in the six months ended September 30, compared to a loss of $6.2 million a year ago. Revenue grew 31% to $94.6 million, with strong growth across all if its business segments.

Warehouse (NZX: WHS ) rose 1.6% to $3.88, pacing gainers on the main board.

Argosy Property Trust (NZX: ARG ) rose 1.3% to 80 cents, Michael Hill (NZX: MHI ) rose 1.3% to 81 cents, and Restaurant Brands (NZX: RBD ) rose 1.1% to $2.73.

DNZ Property (NZX: DNZ ) rose 0.8% to $1.21 after it delivered its maiden result as a listed company, with a net loss of $112.8 million for the six months to September 30, from a loss of $11 million a year earlier.

The bottom line loss included a $31.8 million cost related to the purchase its management contract previously owned by chief executive Paul Duffy and Alastair Hassell and an $86.3 million deferred tax liability as a result of becoming a listed portfolio investment entity (PIE) from July 1. Before these items, the net result of $8.1 million was down 35.7% on the year-earlier interim result.

Xero (NZX: XRO ) rose 5.5% to a record high of $1.92, after reporting a 184% increase in revenue for the six months to September 30, from $1.3 million previously.

The interim net loss was $4.7 million from a loss of $3.8 million a year earlier, while operating expenses rose 59% to $7.9 million as the company expanded its head count in New Zealand, Australia and the UK to 101 from 73.

Cash reserves, which are funding the company until it becomes cash-flow positive, fell to $16.6 million in the period from $25.9 million previously, excluding the $4 million raised when the company tapped PayPal co-founder Peter Thiel.

Businesswire.co.nz

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