NZX CLOSE: Shares fall; Telecom sinks to record, NZR advances

Tuesday 16th March 2010

New Zealand shares fell, pushing the NZX 50 Index lower for the first day in three, as Telecom Corp sank to a record low after saying the rural broadband scheme will slash earnings for the next three years. New Zealand Refining rose after reporting improved refinery margins.

The NZX 50 fell 23.353, or 0.7%, to 3207.796. Within the index, 21 stocks fell, 10 rose and 18 were unchanged. Turnover was $59.7 million.

Telecom (NZX: TEL ) fell 1.8% to $2.17, the lowest level since its trading debut in the early 1990s. The government’s plans to rollout broadband services to rural areas while amending the way Telecom is compensated for maintaining uneconomic lines will slash the company’s earnings by $168 million over three years, it said today.

“Considering all of the troubles they have had with their network, this is disappointing for them,” said Grant Williamson, director of brokerage Hamilton Hindin Greene in Christchurch.

“It is still a good environment for equities at the moment,” he said. Still, “some prices, I find, are a bit ahead of themselves.”

NZ Refining rose 6.2% to $3.61, after announcing that its refining margin recovered to US$6.85 per barrel in the first two months of the year, from as little as US$1 in December. Williamson said while margins are still volatile, NZR may have seen the worst of its margin decrease.

Telstra (NZX: TLS ) rose 0.5% to $4.01 on the NZX and is up 1.32% to A$3.08 on the ASX. Australia’s biggest phone company today announced the completion of a 1 billion euro bond sale, marking its first foray into the bond market since Lehman Brothers collapsed in September 2008.

Air New Zealand (NZX: AIR ) fell 2.2% to $1.32, after shedding its dividend. The company announced today that it will extend its seat capacity on domestic flights by 11% in January next year and boost seats a further 26% for the duration of the Rugby World Cup. Domestic routes have been a bright spot for carrier, which has faced dwindling demand for long-haul and trans-Tasman flights.

Fisher & Paykel Appliances Holdings (NZX: FPA ) rose 1.6% to 65 cents. The company is to take over the Australian sales, marketing and customer care services of its 20% stakeholder, Haier, under separate management from the Australian FPA brand, but using Haier’s existing distribution. China’s Haier, the world’s second-largest appliance brand helped recapitalise the company last year.

Sky City Entertainment Group (NZX: SKC ) fell 0.9% to $3.25. The casino company, in its interim report, reiterated that full-year earnings, excluding the one-time impact of the sale of its cinema chain, would climb 10% to 15%. It expects a “continuing challenging environment” in New Zealand in the second half, while Australia will reflect the tailing off of fiscal stimulus measures and the impact of a smoking ban on its Darwin casino.

Businesswire.co.nz

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