MARKET CLOSE: NZ Farming Systems leads NZX 50 higher; GPG drops

Friday 27th February 2009

New Zealand shares rose, driving the NZX 50 Index to its biggest gain in more than a month, as NZ Farming Systems Uruguay and PGG Wrightson rallied, and Australian banks rose.

The NZX 50 rose 24.884, or 1%, to 2522.217, only the second gain in 10 sessions. Within the index, 25 stocks rose, 14 fell and 11 were unchanged. Turnover was NZ$86 million.

NZ Farming Systems soared 38% to 51 cents and Wrightson, which has the management contract for the dairy farm developer, jumped 15% to 91 cents. Wrightson yesterday maintained its interim dividend at 5 cents a share, even after posting a NZ$32.8 million loss. That provides cash for shareholders such as Craig Norgate's Rural Portfolio Investments, which owns 51.6% of the stock and has debt funding commitments looming. Late today, RPI said it may sell redeemable preference shares maturing in 2013 to replace the maturing 2009 issue.

Wrightson, which has fallen 44% this year, gained agreement from its banks to extend its debt facilities though it has already drawn about NZ$400 million of the NZ$475 million total.

"There's a bit of a relief rally that they're not going down to zero," said Craig Brown, equities manager at ING New Zealand. Still, there are questions over the broader group including potential liabilities to Silver Fern Farms, he said.

Guinness Peat Group fell 13% to 60 cents after the investment company chaired by Ron Brierley posted a full-year loss as it wrote down the value of its portfolio and its Coats threadmaker unit was hit by the economic downturn.

The downturn may limit GPG's ability to make some sort of capital return to shareholders in 2010 that was to coincide with Brierley's retirement as chairman. Shares of GPG are down 35% this year.

Pike River Coal fell 2.4% to 80 cents before being halted pending an announcement. The shares have fallen 11% since Feb. 19 when the coal miner reported a rock fall had blocked a ventilation shaft critical to venting mine air and gases to the surface and providing fresh air. "The timing was unfortunate coming just as Pike River was about to commence its ramp-up of coal production," the company said today. It posted a NZ$9.6 million interim loss, reflecting mine development costs prior to any coal being extracted and now has to find the funds for remedial work.

Fisher & Paykel Appliances fell 2% to 49 cents, a record low. The whiteware manufacturer yesterday said it was in talks with its banks to ensure it doesn't breach its loan covenants as at March 31 and is still contemplating raising new capital. Yesterday, the company refuted media reports about the state of its balance sheet.

FPA stock "should be in a trading halt," ING's Brown said. "Innuendo and rumour" are swirling. "It's not an environment for efficient pricing of their stock," he said.

Pyne Gould Corp. fell 3.4% to NZ$1.69 after reporting a first-half net loss of NZ$17 million on increased provisioning for impaired assets at MARAC, a share of losses at PGG Wrightson from the writedown of its holding in NZ Farming Systems Uruguay, and the $25 million underwrite facility extended to MARAC to help manages bad loans.

ING's Brown said this reporting season "is one of the worst I have ever been through." Companies are struggling to predict the outlook and the broader economic conditions "have really got quite a lot worse heading into 2009."

"The lack of clarity has just forced people to take a leg down" as company balance sheets weaken and demand abates, he said.

Among other shares, APN News & Media fell 9% to NZ$1.59 on the NZX, the second daily decline after yesterday reporting a full-year net loss of A$24 million to write down the value of its New Zealand assets.

Brewer Lion Nathan fell 3.3% to NZ$10.88 and Skellerup Holdings fell 1.8% to 56 cents.

Businesswire.co.nz

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