Disappointing Telecom pushes market lower

By NZPA

Friday 3rd August 2007

The New Zealand sharemarket closed at a four-month low today as investors punished top stock Telecom for a disappointing annual result.

The benchmark NZSX-50 index lost 15.79 points, or 0.4%, to 4122.41 on turnover totalling $171 million.

The index has shed over 100 points during the week, and has lost ground in six consecutive sessions amid global seesawing on the back of US credit concerns.

"People are just running a bit scared, there's a reasonable amount of volatility around and I think people are just holding fire," said Campbell Stuart of UBS.

Telecom shed 3.4%, or 15c, to a 10-month low of 4.32 after forecasting a fall of up to 8% in New Zealand earnings before interest, tax, depreciation and amortisation this year.

The forecast for group net earnings after tax of between $680m to $720m was below analyst expectations of $757m.

Telecom announced a bottom line annual profit of $3.02 billion, two-thirds of it from the sale of the Yellow Pages Group.

"The Telecom result, and then the Commerce Commission coming out straight after it, set a slightly negative tone that people weren't quite expecting, and the market's just continued to fade," Stuart said.

The Commerce Commission said in a draft report it recommended regulation of mobile roaming after rejecting an undertaking from Vodafone, which it said did not go far enough to encourage competition in New Zealand's mobile duopoly.

In contrast, second-ranked Fletcher Building surged 2.8%, or 34c, to $12.50 after announcing the planned closure of its board plant in south Auckland, with the loss of 65 jobs. The company also said it had purchased Australian-based AG&S Building Systems and Hi Tech Pty Ltd, trading as Fair Dinkum Homes and Sheds.

Among other blue chips, Contact Energy was up 13c at $9.30, Auckland Airport was flat at $3.28, Fisher & Paykel Healthcare was up a cent at $3.29, and F&P Appliances lost 9c to $3.48.

Retirement village company Ryman Healthcare rose 5c to $2.09 after affirming annual earnings guidance of 20% growth.

The Warehouse rose 14c to $6.25 after saying it had joined appeals by Woolworths and Foodstuffs against the Commerce Commission's rejection of their applications to take over the Red Shed owner.

Air New Zealand was flat at $2.66 after news it is buying four Boeing long-haul 777-300ER planes and retaining its fuel surcharge.

Nuplex was up 5c at $6.85 and Mainfreight gained 5c to $7.45, while Freightways was down 12c at $3.85.

Among dual-listed stocks, ANZ was up 55c at $31.20, Westpac gained 55c to $29.00, AMP lost 7c to $11.10, and Lion Nathan rose 20c to $9.80.

Japan's Nikkei average rose 0.1%, and Australia's benchmark S&P/ASX 200 index was also little changed, up 4.8 points at 6016.

Earlier on Wall Street, US stocks rose in another late rally as enthusiasm about strong earnings tempered nervousness about more weakness in credit conditions with news another mortgage lender may fold.

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