NZX CLOSE: NZ shares fall; Contact dips on lack of guidance, ALF drops

Thursday 22nd October 2009

New Zealand shares fell for a second day, retreating from a 14-month high, after Contact Energy avoided giving clear guidance on the outlook for earnings and investors fretted about Pike River Coal’s need for more cash.

The NZX 50 Index fell 16.52, or 0.5%, to 3201.69. Within the index, 23 stocks fell, 16 rose and 11 were unchanged. Turnover was $75.7 million.

Pan Pacific Petroleum fell 3.6% to 54 cents, leading the index lower. The oil company has tumbled 17% since announcing on Oct. 13 that it had missed out on a stake in a Vietnam field when another party exercised pre-emptive rights.

Pike River fell 1.7% to $1.14 amid concern it has to tap investors for more funds to cover its operating costs until revenue from coal sales starts to flow. On its third-quarter activity report, Pike said delays in production coming on-stream had increased working capital requirements, with about $20 million required in the first half of 2010.

Contact Energy Ltd., the country’s largest listed power company, fell 1.3% to $6.19 after giving little clue to the direction of earnings at its annual shareholders’ meeting. Chief executive David Baldwin told reporters after the meeting that the company would be obliged to make a statement if it disagreed with the consensus among forecasters.

Analysts’ EBITDAF consensus is in the “vicinity” of $485 million, he said, against last year's $445.3 million.

Alan Moore, who helps manage $350 million at Milford Asset Management, said he wasn’t surprised at the lack of guidance. “I’m not sure they know where Contact is going themselves,” he said. “They’re still suffering from a lack of customers and a lack of confidence in the board.”

Cue Energy Resources fell 2.9% to 33 cents in the oil company’s second day trading on the NZX. New Zealand Refining gained 2.9% to $5.40. The price of crude oil rose to above US$81 a barrel, touching a 12-month high, as the U.S. dollar weakened.

Fisher & Paykel Healthcare, the medical products maker that gets almost 80% of its revenue in U.S. dollars, fell 1.4% to $2.93. The kiwi dollar traded at about 75.30 U.S. cents and earlier rose above 76 cents for the first time since August 2008.

Methven Ltd., which sells tapware and bathroom fittings in New Zealand, Australia and the U.K., fell 2.2% to $1.76.

Turners Auctions Ltd., the largest single seller of motor vehicles in the country, jumped 4.2% to $1.25 after raising its full-year profit forecast, citing a pick-up in volumes and cost control, which yielded a better than expected third quarter. The shares have surged 64% in the past three months. Annual profit will be $3.1 million-$3.3 million, up from its August guidance of $2.6 million-$2.8 million.

Allied Farmers Ltd. sank 3.6% to 27 cents, extending its six-month decline to more than 45%, after the rural services and finance group said it breached a lending covenant and said trading conditions are “tough.”

Westpac Banking Corp. has granted a waiver to the company after it breached banking covenants in the September quarter, it said.

Businesswire.co.nz

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