MARKET CLOSE: Stocks down on weaker showing from Telecom and Contact

Friday 20th August 2010

New Zealand stocks fell for the second time is six sessions, hovering just above the 3000 point mark after tepid earnings from heavyweights Telecom and Contact Energy.

The NZX fell 29.4 points, or 1%, to 3000.40. Within the index, 24 stock fell, 17 rose and nine were unchanged. Turnover was $91.8 million million.

Telecom (NZX: TEL ) fell 3.3% to $2.03 as the company posted a 2.4% increase in earnings before interest, taxation, depreciation and amortisation to $428 million in the three months ended June 30.

“Telecom moved up ahead of the results on feeling and fell on the fact, which has pushed the market weaker,” said Grant Williamson, a director at Hamilton Hindin Greene. “Quite frankly it would have taken an extremely good result to get any upward movement in this market.”

Contact Energy (NZX: CEN ) fell 0.7% to $5.78, after the company reported underlying earnings of $150 million in the year to June 30, in line with expectations. Directors announced a reduced final dividend equivalent to 14 cents a share, bringing the full-year payment to 25 cents, down 3 cents on the year before. Underlying earnings per share fell 7% to 25 cents.

Shares in Allied Farmers (NZX: AFF ) fell 3.7% to 2.6 cents after its Allied Nationwide Finance subsidiary was placed in receivership after being forced to halt new fund raising, becoming the seventh firm poised to make a call on the government retail deposit guarantee.

Allied Nationwide has asked trustee NZ Guardian Trust to appoint receivers after running out of time to remedy a breach in its Trust Deed ratio. It had until 5 pm today to save itself. It has about $130 million owed to about 4,500 depositors.

Jeweller Michael Hill (NZX: MHI ) fell 4.4% to 66 cents, leading declines on the NZX 50, after reporting a 60% decline in net profit to $26.5 million. The year-earlier results included the $50.1 million tax credit. Operating earnings were up 38% to $36.2 million on sales and profit growth in its New Zealand and Australian operations.

Sky Television (NZX: SKT ) fell 0.6% to $2.89. The company today reported a 16% increase in full-year profit as a lineup of sports events and tough economic conditions made TV a more attractive form of entertainment. The shares have declined 2.6% this year, outperforming the NZX 50’s 6.6% decline.

Turners Auctions (NZX: TUR ) was unchanged at $1.26. The company had posted a 6.1% increase first-half profit to $1.5 million from $1.4 million in the same six months last year amid a slow recovery in the used cars market from 2009's lows.

Cavalier (NZX: CAV ) rose 3.9% to $2.65, leading gains on the day. The company has weathered the global financial crisis with a 22% increase in normalised profit to $16.6 million for the year ending June 30, as it reduced interest costs and improved operating efficiencies across its business. Net income fell to $11.4 million, reflecting a one-off non-cash adjustment of $5.2 million as a result of changes to tax rules for depreciation of property.

“Cavalier is a very well-run company that continues to do very well,” Williamson said. “The outlook is slightly upbeat going forward with the World Cup next year.”

New Zealand Experience (NZX: NZE ), which operates the Rainbow’s End theme park in Manukau, rose 9.4% to 35 cents after the company reported a 22% increase in underlying earnings, as its new Invader ride drew more visitors at higher ticket prices.

Goodman Fielder (NZX: GFF ) rose 2.6% to $1.61, Pyne Gould Corp., the financial services company, rose 2.3% to 44 cents and clothing retailer Hallenstein Glasson Holdings rose 2.1% to 3.94.

Businesswire.co.nz

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