MARKET CLOSE: NZ shares fall as companies miss lofty expectations; A2, Meridian drop

Wednesday 24th August 2016

New Zealand shares fell, led by A2 Milk and Meridian Energy as hopped-up investors who have driven the benchmark index to record highs weren't satisfied with results that broadly met expectations.

The S&P/NZX 50 Index fell 57.03 points, or 0.8 percent, from a record high to 7410.30. Within the index, 32 stocks fell, 13 rose and six were unchanged. Turnover was $212 million.

A2 dropped 8.7 percent to $2.10, even after reporting a return to profit that met its guidance in June and posting a 127 percent gain in revenue. The company sees more growth in the 2017 year in infant formula and milk powders, it said.

Meridian fell 2.2 percent to $2.88 despite posting a 5 percent gain in pretax earnings and announcing a special dividend of 2.44 cents a share on top of a final dividend of 8.4 cents, of which 90 percent was imputed.

"All these companies have been coming out with good results and that's what the market has been paying for so now it is saying great, what's next," said Shane Solly, a director at Harbour Asset Management. "A2 was a great result and actually did meet guidance but the market has become used to positive upgrades."

He said the New Zealand market has been "an absolute rock star" but is also "quite finely tuned at the moment."

Genesis Energy, which also reported today, fell 3.3 percent to $2.195. Its full-year operating earnings slipped 2.7 percent, which it said reflected lower electricity, gas and oil prices combined with ongoing retail market competition.

Vector fell 1.1 percent to $3.49 after reporting a 4.7 percent gain in adjusted full-year earnings on growth in Auckland and the expansion of its smart meter fleet, while signalling earnings growth may stall in 2017.

Solly said the company is in pretty good order with a robust balance sheet, although it faces structural challenges longer term.

Fisher & Paykel Healthcare declined 2.6 percent to $9.95 and Spark New Zealand fell 2.2 percent to $3.815. Goodman Property Trust dropped 2.2 percent to $1.35.

NZ Oil & Gas rose 7.1 percent to 52.5 cents after the company said it will resume dividend payments, having clamped down on costs in response to the slump in global energy prices.

Wynyard Group tumbled 16 percent to 31 cents after the intelligence software developer more than doubled its first-half loss and halved its full-year guidance.

Metro Performance Glass, which has more than half the country’s glass processing market, rose 2.4 percent to $2.15 after telling shareholders at their annual meeting that it expects to see a “marked improvement” in the coming year as it reaps the benefit of New Zealand’s building boom and looks further afield with its recent Australian acquisition.

NZ Refining gained 2.5 percent to $2.42 a day after it posted an 82 percent slump in first-half profit and trimmed its interim dividend as a build-up in global oil stocks weighed on the Marsden Point refinery operator's margins. The decline was smaller than some analysts had expected.

BusinessDesk.co.nz

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