MARKET CLOSE: NZX 50 drops as F&P Appliances tumbles 35%

Monday 16th February 2009

New Zealand shares fell, driving the NZX 50 Index to its biggest decline this year, after Fisher & Paykel Appliances said it may have to raise more capital to counter surging debt and dwindling earnings.

The NZX 50 fell 70.59, or 2.6%, to 2680.19. Within the index, 34 stocks fell, eight rose and eight were unchanged. Turnover was NZ$80.3 million.

F&P Appliances fell 35 cents to 65 cents, wiping NZ$102 million from its market value, and pushing the shares to the lowest since the company was split off from its healthcare sibling in 2001. Bank debt will balloon out to NZ$570 million by the end of March, or about twice the value of its shares. It forecast no profit this year amid a slump in demand and rising costs.

"It's a pretty disappointing announcement in the extreme," said James Lindsay, equities manager at Tyndall Investment Management. "There are not too many things working for them at the moment."

Figures today showed New Zealand's services industry contracted for the tenth straight month in January as activity levels and employment weakened. The Bank of New Zealand - Business NZ Performance of Services Index (PSI) fell to 42.7 last month, from 48 in December, the lowest reading since the survey began.

Freightways fell 5.5% to NZ$2.95 after the transport and logistics company said costs rose, paring its first-half profit gain to 1%. It cut the first-half dividend to 8 cents from 9.5 cents and said it faced a "challenging operating environment."

Nuplex Industries dropped 8.6% to NZ$2.22 and Telecom, the biggest company on the NZX 50, fell 5.3% to NZ$2.49.

Fletcher Building, the nation's biggest construction company, fell 3.6% to NZ$5.63. The company today gained Commerce Commission approval to acquire 100% of the assets of both Stevenson Group's Whangarei and Auckland masonry businesses. The target company is unprofitable and faced closure if it couldn't find a buyer.

Air New Zealand sank 4.3% to 90 cents on reports that Qantas Airways' Jetstar unit will begin flights on main domestic routes in New Zealand. The news was welcomed by Transport Minister Steven Joyce, who told Businesswire that "all competition is good as a general rule."

"Obviously their operators can see something that others can't," Joyce said.

Australian insurer AMP rose 3.5% to NZ$6.50, leading rising shares on the NZX 50.

In Australia, the S&P/ASX 200 Index fell 1.3% to 3511.8. Transpacific Industries Group tumbled 24% to A$2.12 after the industrial services group said it expects A$46 million in market-to-market losses in the first half.

Rio Tinto fell 1% to A$50.45, extending its decline on reports its biggest shareholders are unhappy with the structure of its agreement to sell assets and convertible bonds to China's Chinalco to raise US$19 billion.

Japan's Nikkei 225 Index fell 0.2% to 7763.84 after government figures showed the world's second-biggest economy suffered its biggest contraction since the 1974 oil crisis. The economy shrank 3.3% last quarter, or an annualized rate of 12.7%.

Businesswire.co.nz

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