Stocks to watch: Telecom earnings sink

Friday 13th February 2009

The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: Telecom Corp., the biggest company on the NZX 50 Index, posted a 92% drop in second-quarter profit as one-time charges and falling sales dragged down its bottom line. Figures today may show retail sales dropped 1.1% in December, after growth stalled in the previous month.

Auckland International Airport (AIA): Funds associated with Australia's Macquarie Group, including Brook Asset Management, became a substantial shareholder in the nation's busiest gateway, yesterday disclosing a 5.01% stake. The shares rose 0.5% to $1.90 yesterday and have climbed 11% in the past month.

Fisher & Paykel Appliances (FPA): The stock fell 5.6% to a new record low $1.02 yesterday extending their slide since Whirlpool Corp., the world's biggest appliances maker and its distribution and technology partner, posted a slump in earnings and said the global slowdown "had a significant impact on consumer demand in all parts of the world."

Metlifecare (MET): The retirement home operator yesterday announced plans to raise as much as $37.8 million selling shares via a rights issue at $1.08 apiece. It posted a $61.9 million first-half loss after reducing the value of its properties to reflect the downturn in the sector. The shares last traded on Feb. 5 at $2.50 and are down 32% in the past three months.

New Zealand Refining (NZR): Royal Dutch Shell Plc, Europe's largest oil company, is reviewing its investments in New Zealand including a 17% stake in the nation's only refinery. Shell is New Zealand Refining Co.'s third-biggest shareholder after BP and Mobil and one of four oil companies that have a processing agreement with the refinery. Sale of the assets is an option, it said. The shares fell 0.4% to $7.27 yesterday.

Northland Port (NTH): The company yesterday announced it would buy back as much as 2.17 million, or 5% of its shares in the 12 months starting February 18. The shares last traded at $2.70 on February 10.

Telecom Corp. (TEL): The biggest company on the NZX 50 said second-quarter profit slumped to just $7 million on one-time charges to write down the value of assets, costs to comply with government regulation and increased competition for customers. The company reiterated its forecast full-year net profit of between $460 million and $500 million, down from last year's $713 million. The stock rose 0.8% to $2.66 yesterday and is down 35% in the past 12 months.

Tenon (TEN): The wood products and mouldings company yesterday said first-half profit halved to US$1 million, reflecting a downturn in demand in the US and unfavourable currency movements. The company said it faces "extremely tough market conditions" through fiscal 2009 and second half earnings will probably about match the first six months. The stock tumbled 20% to 40 cents yesterday, the lowest in at least a decade.

By Jonathan Underhill

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