MARKET CLOSE: NZ stocks fall: Nuplex drops on earns concern

Tuesday 17th February 2009

New Zealand stocks fell for a second day as Nuplex Industries extended its slide amid concern the specialty chemicals company's balance sheet will weaken as earnings abate. Fisher & Paykel Appliances jumped 11%, clawing back some of yesterday's 35% slump.

The NZX 50 Index fell 7.564, or 0.3%, to 2672.62, adding to yesterday's 2.6% slide. Within the index, 28 stocks fell, 10 rose and 12 were unchanged. Turnover was NZ$87.9 million.

Nuplex dropped 7.2% to NZ$2.06 to the lowest level since May 1995 and has shed 23% since the company's Feb. 2 announcement that earnings would miss its forecasts because of a downturn in demand in Europe.

The announcement "made people nervous about how they are with their bank covenants with the market cap coming down," said Ian Waddell, head of stock broking at Waddell Johnston McCarthy.

Tapware manufacturer Methven Ltd. dropped 9% to NZ$1.11, the lowest since the stock began trading in November 2004. Some investors have marked down the stock on concern about its exposure to the housing sector, which is in a slump, Waddell said.

House sales tumbled in January while properties took longer to sell, suggesting uncertainty about the economic outlook is damping demand even as mortgage rates fall, according to the Real Estate Institute of New Zealand.

Still, Methven is making sales by tapping demand for low-flow taps and shower heads, especially in Australia in areas that have water restrictions, Waddell said. Hotel chains have been among the customers, he said.

PGG Wrightson fell 4% to NZ$1.20 after the company offered NZ$10 million to Silver Fern Farms as part of a mediation offer to resolve their failed merger. Wrightson had agreed to the deal but failed to settle after some of its banks backed off from providing finance. The amount would be taken against Wrightson's first-half earnings, it said today.

Australia & New Zealand Banking Group dropped 2.8% to NZ$15.75, following declines by European banks on concern the sector faces more headwinds. Lloyds Banking Group fell 8% on the FTSE 100 Index after disclosing losses at its newly acquired HBOS unit.

F&P Appliances jumped 7 cents to 72 cents, paring its slide in the past month to 51%. The stock has weakened as partners such as Whirlpool announced deteriorating earnings, amid a global downturn in demand for appliances. This week, F&P Appliances said it may have to raise capital as debt levels rose, prompting Prime Minister John Key to say the government stands ready to rescue iconic New Zealand companies that get into difficulties.

Tower Ltd. rose 3.3% to NZ$1.55 after Chairman Tony Gibbs said the insurer and money manager's trading in the first four months of the year was ahead of the year-earlier period, and the company would continue with its dividend payments.

Sanford Ltd., which exports fish, climbed 2.4% to NZ$5.58 as the New Zealand dollar weakened to 51.17 U.S. cents from 51.60 cents. A weaker currency lifts the value of its overseas revenue in kiwi dollar terms.

In Sydney, the S&P/ASX 200 Index fell 1.5% to 3464.3, as concerns about the financial sector worldwide weighed on bank stocks. ANZ Bank fell 4.2% to A$12.43 and Commonwealth Bank dropped 2.2% to A$28.97.

Paperlinx Ltd. jumped 100% to 65 cents after agreeing to sell an Australian manufacturing business to Nippon Paper group for A$600 million.

Brambles Ltd., the world's biggest wooden pallet company, dropped 14% to A$4.86 after analysts downgraded the company's stocks.

In Japan, the Nikkei 225 Index fell 1.4% to 7643.89, led by financials.

Businesswire.co.nz

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