Market Close: NZ stocks slide on weaker earnings outlook

Wednesday 19th November 2008

New Zealand stocks fell, sending the NZX 50 Index lower for the sixth day in seven, led by companies that have warned of weaker earnings, including Rakon and Pumpkin Patch.

The NZX 50 Index dropped 11.871, or 0.4%, to 2702.717. Within the index, 26 stocks fell, 13 rose and 11 were unchanged. The NZX 50 has declined 18% in the past three months.

Pumpkin Patch declined 4.3% to 90 cents. That’s 28% below the company’s 2004 IPO price and follows a 6% drop yesterday, when chief executive Maurice Prendergast said 2009 earnings would weaken after an “extremely difficult” first quarter.

Government figures today showed prices paid by the nation’s farmers and manufacturers rose at a faster clip that the prices they charged for their output in the third quarter, suggesting profit margins are being squeezed.

Companies “are feeling the pinch,” said Mark Walton, markets economist at Bank of New Zealand. “We expect such conditions to prevail over the course of 2009.”

Rakon fell 1.9% to $1.02 and has tumbled 40% since Nov. 14, when the make of components for navigation systems posted a 66% decline in first-half profit and said second-half earnings would be at about the same level or lower. It cited operating losses in France and weaker world demand.

Air New Zealand fell 2.2% to 89 cents after announcing plans to cut 200 workers, mainly from its long-haul cabin crews, because of a drop in demand. The airline may also face increased competition on domestic routes after rival Qantas said it plans to operate its low-fare Jetstar unit within New Zealand.

Mainfreight, the nation’s biggest trucking company, fell 5.9% to NZ$4.45. The company is scheduled to post its first-half results tomorrow. Tap-maker Methven fell about 3% to NZ$1.30.
Seeka Kiwifruit Industries fell 6% to NZ$2.35 after forecasting a full-year pretax profit of NZ$4.8 million to NZ$5.4 million. First-half profit rose 47% to NZ$8.4 million, helped by a weaker New Zealand dollar.

PGG Wrightson rose 3.4% to NZ$1.52 after its finance unit increased a planned bond sale by NZ$25 million to NZ$100 million, citing strong demand from investors.

In Australia, the S&P/ASX 200 Index fell 0.7% to 3499.6, led by a 23% slump in Babcock & Brown to 24 Australian cents after the investment group said it would cut jobs and sell assets as it tries to avoid default on its debt. CSR Ltd., Australia’s No. 3 building products company, fell 17% to A$1.42 after announcing plans to raise A$482 million by selling more shares.

OZ Minerals, the world’s second-largest zinc miner, fell 14% to 63 cents after saying profit will fall this year as metal prices fall and costs rise.

Japan’s Nikkei 225 Index fell 1.4% to 8219.81 in mid-day trading. Mitsubishi, part of the trading group of the same name, fell 10% to 1105 yen.

(Businesswire.co.nz)

NZX Top 50
Last updated: 19/11/2008 5:09pm

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