MARKET CLOSE: Shares fall; Nuplex, Wrightson, Appliances drop

Thursday 19th February 2009

Shares fell, pushing the NZX 50 Index to a three-month low, after Nuplex Industries said it is in talks with banks to ease conditions of its loan terms and PGG Wrightson's settlement offer was spurned by Silver Fern Farms.

The NZX 50 fell 4.08, or 0.2% to 2616.93, its fourth straight decline. Within the index, 25 stocks fell, 18 rose and seven were unchanged. Turnover was NZ$88.7 million.

Nuplex tumbled 19% to NZ$1.50 after the manufacturer of resins and specialty chemicals said it needed agreement from its banks to loosen the senior debt cover ratio requirements of its bank facilities or it risked breaching the covenants.

The Auckland-based manufacturer led a slide in companies that have operations and debt in the Northern Hemisphere, where the downturn has been more severe. Whiteware specialist Fisher & Paykel Appliances fell 3% to 62 cents and has slumped 52% this year, while Rakon, which makes navigation system components, fell 2.7% to 73 cents and has dropped 31% since Dec. 31. Children's clothing chain Pumpkin Patch dropped 2.5% to 78 cents.

"The recession in the Northern Hemisphere is far, far worse than it is down here," said Brian Gaynor, who helps manage NZ$250 million at Milford Asset Management. "People are nervous because they've seen massive collapses."

Wrightson slumped 16% to 82 cents after Silver Fern Farms rejected its offer of NZ$10 million to settle the failed NZ$220 million acquisition of a half stake in the South Island meat cooperative. Separately, Wrightson's part-owned South American offshoot, NZ Farming Systems Uruguay, today posted a wider first-half because of falling milk prices and the costs of a drought, denying Wrightson a management fee.

"Investors are nervous about companies that have a lot of debt at the moment," Gaynor said. "They know banks are acting completely differently than they were two years ago."

NZ Farming Systems fell 3.5% to 56 cents. The dairy farmer abandoned plans to raise capital for more dairy conversions because of the financial crisis.

Michael Hill International fell 1.9% to 51 cents after the jewellery chain reported a 37% drop in operating profit to NZ$17.9 million on weakening demand for its wares. Net profit rose to NZ$65.6 million, boosted by a tax gain from its relocation to Australia.

Auckland International Airport fell 1.1% to NZ$1.89 after the nation's busiest gateway posted a 79% drop in first-half profit after reducing the value of the company's investment property portfolio. Earnings rose 8.3% to $51.6 million excluding property revaluations. Revenue gained 6.8% to $184 million. Full-year profit would be at the low end of its NZ$100 million to NZ$110 million range, excluding property revaluations.

Businesswire.co.nz

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