MARKET CLOSE: NZX 50 drops; Tourism Holdings, Cavalier fall

Tuesday 24th February 2009

Shares fell, pushing the NZX 50 Index to a new five-year low, as shares of Tourism Holdings, Cavalier Corp. and Fisher & Paykel Appliances sank amid concern weaker balance sheets give companies less of the buffer in the economic downturn.

The NZX 50 fell 50.76, or 2%, to 2487.53, the seventh straight daily decline. Within the index, 36 stocks declined, 10 rose and four were unchanged. Turnover was NZ$93 million.

Tourism Holdings dropped 12% to 43 cents, leading the NZX 50 lower. Shares of the campervan and tourist venture company have slumped more than 30% in the past month amid signs the falling New Zealand dollar isn't arresting a slide in inbound tourism. Carpet maker Cavalier slid 11% to NZ$1.34 and F&P Appliances declined 9.1% to 50 cents.

"The market has been very harsh on companies where there's a perception of balance sheet issues, or banking covenant issues," said Stephen Walker, head of asset management at Goldman Sachs JBWere.

Nuplex Industries dropped 8% to NZ$1.15, extending its slide since the maker of resins and specialty chemicals said it was in talks with its banks to try to avert a breach of its loan covenants.

F&P Appliances has been hit by the weakening New Zealand dollar, which has swelled the value of its overseas debt at a time when demand for its products is dwindling. The manufacturer has said it may raise more capital to repay debt, a move Goldman Sachs JBWere's Walker supports.

Whirlpool would be an obvious cornerstone investor since the two companies have a relationship dating back almost a decade to share technology and distribution, Walker said.

PGW Wrightson, the rural services company that posts its first-half earnings on Thursday, gained 3.1% to 67 cents while NZ Farming Systems Uruguay, the dairy farm developer managed by Wrightson, slid 5% to 38 cents.

Pumpkin Patch jumped 14% to 95 cents and was the biggest gainer on the NZX 50. The children's clothing chain today posted a 7% drop in first-half earnings as demand weakened. Still, the result was better than some analysts had expected, reflecting stronger earnings in Australasia.

Sanford climbed 4.6% to NZ$5.49. The fishing company as the best performer on the NZX 50 last year and has fallen 2% so far this year, outperforming the index, which is down 9%. The company benefits from a weaker dollar, which boosts the value of its export sales.

Australia's S&P/ASX 200 Index fell 0.6% to 3331.6, sinking to its lowest close in about five years. Goodman Group tumbled 21% to 30 cents. Suncorp-Metway fell 6% after posting a drop in first-half profit.

Businesswire.co.nz

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