MARKET CLOSE: Shares snap 3-day slide; Steel & Tube jumps

Thursday 12th February 2009

New Zealand shares snapped a three-day slide as Steel & Tube Holdings posted a jump in earnings and Fletcher Building said its balance sheet is strong enough to survive the downturn.

The NZX 50 Index rose 19.921, or 0.7%, to 2750.146, the biggest gain since Jan. 27. Within the index, 26 stocks advanced, 16 fell and eight were unchanged. Turnover was NZ$96 million.

Steel & Tube Holdings rose 5.1% to NZ$3.10 after the steel building products supplier said first-half profit more than doubled to NZ$20.8 million on higher prices for steel. Demand from commercial construction projects and farmers helped make up for a housing downturn, chief executive Nick Calavrias said. Deteriorating market conditions would erode second-half profit, he said.

Fletcher Building climbed 0.7% to NZ$5.54 after reporting a 27% slump in first-half profit. Chief executive Jonathan Ling said the company is "well placed to meet the challenges of the current cyclical downturn." The group is focusing on retaining cash, selling surplus assets and cutting costs, and has un-drawn debt facilities of $615 million against refinancing needs of $211 million in the next 12 months, it said today.

"These guys seem to be doing a reasonable job in difficult times to manage the business," said Craig Brown, equities manager at ING New Zealand. "They are in a strong financial position in this environment."

Telecom gained 2.7% to NZ$2.66 on the eve of the company's second-quarter profit announcement, which is expected to show a drop from the year-earlier NZ$172 million on higher costs and loss of customers from its fixed-line network.

Fisher & Paykel Appliances extended its slide to a new record low, dropping 5.6% to NZ$1.02 and bringing its slide the past month to 22%. The shares have slid this week after Whirlpool Corp, the world's biggest appliances maker and its distribution and technology partner, posted a slump in earnings and chief executive Jeff Fettig said the global slowdown "had a significant impact on consumer demand in all parts of the world."

Helping weigh on manufacturers, a survey today showed that the sector remained in contraction in January, stretching the shrinkage to a ninth month.

Manufacturing weakened by 0.5 point to 42 last month from December, according to the Bank of New Zealand-Business NZ Performance of Manufacturing Index. A reading below 50 indicates a contraction. Production weakened to 39.3 from 39.9 in December, having sunk as low as 29.3 in November. Nuplex Industries, a manufacturer of specialty chemicals and resins, fell 1.2% to NZ$2.44.

APN News & Media, publisher of the New Zealand Herald, fell 13% to NZ$1.75.

In Australia, the S&P/ASX 200 Index rose 1.4% to 3523.2. Gold miner Sino Gold climbed 6.6% and Lihir Gold rose 7.6% as the price of gold advanced to a six-month high on demand for the precious metal as a haven investment.

Leighton Holdings rose 5.7% to A$18.50 after Australia's biggest engineering reiterated its forecast for full-year profit and announced A$2.6 billion of contracts.

Coca-Cola Amatil rose 2.5% to A$8.59 after reporting a surge in second-half profit as hot weather stoked demand for its soft drinks.

In Japan, the Nikkei 225 Index fell 3.1% to 7701.14 as the yen strengthened and concerns mounted that the U.S. efforts to revive economic growth, rescue banks and restore lending to consumers and businesses won't be sufficient to pull the world's largest economy out of its slump.

Nomura Holdings, Japan's biggest brokerage, fell 7.9%, while air-conditioner manufacturer Daikin Industries tumbled 4.9% after cutting its profit forecast.

Businesswire.co.nz

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