CLOSE: Fletcher leads NZX 50 higher, Contact falls on energy panel

Wednesday 12th August 2009

New Zealand shares rose, led by Fletcher Building, after New Zealand’s biggest construction company said cost cutting and debt reduction during the downturn left it in good shape to benefit from the recovery.

The NZX 50 Index rose 24.21, or 0.8%, to 3079.68, edging back toward its 10-month high. Within the index, 15 stocks rose, 22 fell and 13 were unchanged. Turnover was $63.7 million.

Fletcher Building (NZX: FBU ), the second-largest company on the NZX 50, surged about 8% to $7.58, the highest close since Sept. 12, when Lehman Brothers collapsed. The company, which today posted an annual net loss of $46 million, near expectations, “is strongly positioned for the economic recovery, when it comes,” chief executive Jonathan Ling said.

Investors “are getting into thinking the recovery is underway,” said Paul Robertshawe, who manages about $250 million at Tower Asset Management. Fletcher has “run it very prudently.”

Steel & Tube Holdings (NZX: STU ), which supplies construction materials such as reinforcing rods, fell 2.8% to NZ$3.11, the biggest decline on the benchmark index, after Fletcher’s Ling said there has been a downturn in commercial building projects.

Sanford (NZX: SAN ), the fishing company, rose about 1% to $5.25 and Fisher & Paykel Healthcare (NZX: FPH ), which gets almost 80% of its sales in U.S. dollars, gained 0.9% to $3.31 after the kiwi dollar eased. The currency recently traded at 66.40 U.S. cents from 67.55 cents earlier this week.

Sky Network Television (NZX: SKT ), the pay-TV company which has programming and equipment costs in U.S. dollars, fell 2.6% to $4.57.

Michael Hill International (NZX: MHI ), the jewellery chain that counts Australia as its biggest market, climbed 1.4% to 71 cents after government figures across the Tasman showed consumer confidence rose to a two-year high this month, amid increasing optimism that economy is reviving its downturn, having skirted recession.

Pumpkin Patch (NZX: PPL ), the children’s clothing chain that has more stores in Australia than any other market, rose 0.6% to $1.80 after the Westpac-Melbourne Institute Consumer Sentiment Index rose 3.7% to 113.4 in August. The index rounded out a three-month rally of 27.8%, the biggest since the survey began in 1975.

Contact Energy (NZXCEN), the biggest utility on the NZX 50, fell 1.4% to $6.25 after a government-appointed panel recommended measures be taken to bolster competition in the retail electricity market, including allowing distribution companies such as Vector Ltd. to retail more power than they produce themselves. Vector was unchanged at $2.08.

NZ Farming Systems Uruguay (NZX: NZS ), which develops dairy farms in South America, fell 1.9% to 52 cents. The company reports annual earnings tomorrow and is expected to post a loss of about $23 million, reflecting drought in Uruguay, weaker global prices for milk and the impact of delays in securing debt funding.

Telecom (NZX: TEL ), the biggest company on the index, rose 1.5% to $2.76 after dismissing claims by new mobile market rival Two Degrees that dropping mobile termination rates altogether will cut the cost of calls for customers.

Two Degrees this week launched a campaign lobbying for removal of the fee in conjunction with groups including Federated Farmers and the Telecommunications Users’ Association.

Businesswire.co.nz

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