MARKET CLOSE: NZ shares rise as earnings outlook lifts Kathmandu; Tower flags costs

Friday 20th November 2015

New Zealand shares rose after Kathmandu Holdings reported first-quarter margin growth and affirmed its full-year target, while Tower fell after warning that increased costs would dent profit.

The S&P/NZX 50 Index rose 13.27 points, or 0.22 percent, to 6008.52. Within the index, 18 stocks rose, 22 fell and 10 were unchanged. Turnover was $96 million.

Kathmandu led the market, up 5.7 percent to $1.68. The outdoor clothing retailer, which spurned a takeover offer this year, affirmed its guidance for 2016 profit growth after lifting gross margin in the first quarter, and said it would refresh its promotions strategy to reduce "sales fatigue" among customers.

"Kathmandu has regained lost ground," said Rickey Ward, New Zealand equity manager at JBWere. "It's easy to paint a very positive picture, but the devil's in the detail."

Ryman Healthcare rose 2.6 percent to $7.65, on turnover of $11.8 million. New Zealand’s largest retirement village operator posted a 23 percent gain in first-half profit as revenue increased from a bigger asset base and it lifted the value of properties.

Spark New Zealand rose 1.1 percent to $3.28. The country's biggest telecommunications company, will raise as much as $150 million through a retail bond offer, joining a growing number of companies taking advantage of low interest rates to raise debt funding.

Tower dropped 6.4 percent to $1.97. The general insurer said it would report an annual loss next week after raising its provisioning for the cost of the Canterbury earthquake caused by more expensive repairs and rebuilds from its outstanding claims.

"Going from a $3 million profit to a $7 million loss doesn't seem to be too far out of what markets were expecting," Ward said. "However, Tower did provide a little bit of disappointment clearly on guidance."

Air New Zealand fell 2.1 percent to $2.75.

Warehouse Group fell 0.4 percent to $2.71 after the country’s largest listed retailer changed its dividend policy to allow eventual profits from its new financial services group to be ploughed back into building up its lending book. The dividend policy has been to pay out between 75 percent and 85 percent of adjusted net profit after tax and that’s now been modified to apply only to the retail group, excluding financial services, shareholders were told at today’s annual meeting in Auckland.

Among smaller stocks, IkeGPS Group fell 9.1 percent to 7 cents. The laser measurement tool developer widened its first-half loss, while affirming its expectation to triple annual revenue as its smartphone products outperform while sales for its Mapsight product remain inconsistent.

Cooks Global Foods was unchanged at 12 cents after shareholders today backed plans to build a war chest for China's Jiajiayue Group (JJY) and chairman Keith Jackson to inject funds into the business by buying shares, before seeking further equity capital from the public. The NZAX-listed shares last traded at 12 cents, and have declined 11 percent this year.

Blis Technologies fell 3.7 percent to 2.6 cents. The probiotics manufacturer, which has replaced its chief executive after nine years, expects to double annual sales and achieve a small pretax surplus after narrowing its first-half loss.

BusinessDesk.co.nz

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