MARKET CLOSE: Stocks mixed; Telecom falls, ANZ Bank gains

Friday 13th February 2009

New Zealand stocks were mixed, with Telecom ending the day lower after posting a 92% drop in second-quarter profit and Michael Hill International sliding on further signs of a weak retail market.

The NZX 50 rose 0.628, or 0.02%, to 2750.774 as at the 5 p.m. close of trading in Wellington. Within the index, 23 stocks fell, 18 rose and nine were unchanged. Turnover was NZ$68 million.

Telecom fell 1.1% to NZ$2.63 after the company unexpectedly wrote down the value of its PowerTel investment in Australia. Chief executive Paul Reynolds reiterated his forecast for a full-year of between NZ$460 million and NZ$500 million, down from last year's NZ$713 million.

"There are all sorts of medium term risks but relatively speaking, it's looking healthy," said Paul Robertshawe, equities manager at Tower Asset Management. The PowerTel writedown was a surprise - "when they acquired it, it was viewed as hugely synergistic," he said. It turned out to be "expensive in the long-term."

Government figures today showed retail sales fell in the fourth quarter, rounding out a year-long slide as the prolonged recession and rising jobless rate sapped consumer spending and spurred households to reduce debt and conserve cash.

Sales fell 0.6%, inflation adjusted, in the fourth quarter, following a 0.9% slide in the third, according to Statistics New Zealand. That exceeds the 0.5% decline forecast in the Reuters survey.

Jewellery chain Michael Hill International fell 3.8% to 51 cents, leading the NZX 50 lower. Briscoe Group declined 5% to 76 cents and Pumpkin Patch dropped 1.1% to 90 cents.

Pyne Gould Group tumbled 7.7% to NZ$2.40 on its announcement of a first-half loss because its MARAC Finance unit called on a $25 million underwriting facility to cover impaired property loans. The South Island-based company expects a net loss of $13 million to $15 million for the six months ended December 31, the company said in a statement today.

Fisher & Paykel Appliances fell about 2% to a new record low NZ$1, extending its decline since Whirlpool, the world's biggest appliances maker and its distribution and technology partner, posted a slump in earnings and said the global slowdown "had a significant impact on consumer demand in all parts of the world."

Metlifecare tumbled 16% to NZ$2.10 after the retirement home operator yesterday announced plans to raise as much as NZ$37.8 million selling shares via a rights issue at NZ$1.08 apiece. It posted a NZ$61.9 million first-half loss after reducing the value of its properties to reflect the downturn in the sector.

Tenon soared 25% to 50 cents, rebounding after a 20% tumble yesterday, when the wood products and mouldings company said first-half profit halved to US$1 million, reflecting a downturn in demand in the U.S. and unfavourable currency movements. The company said it faces "extremely tough market conditions" through fiscal 2009 and second half earnings will probably about match the first six months.

In Australia, the S&P/ASX 200 Index climbed 1.3% to 3559.1, led by banks. Australia & New Zealand Banking Group jumped 8.7% to A$12.92 after the lender doused market speculation that it planned to raise new capital and said its tier-1 capital ratio met regulatory requirements.

Rio Tinto sank 2.1% to A$50.91 on the prospects of Chinalco investing US$19.6 billion in the mining company, taking half stakes in nine of its mining businesses.

In Japan, the Nikkei 225 Index climbed 1.4% to 7808.52.

Businesswire.co.nz

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