MARKET CLOSE: NZX 50 falls in light trading; Contact dips on forecast

Monday 8th June 2009

New Zealand shares fell, with the Queen’s Birthday public holiday in Australia keeping trading light, after Contact Energy Ltd. cut its earnings forecast and Fisher & Paykel Healthcare slipped as investors contemplated the company’s lower-than-expected profit outlook.

The NZX 50 Index fell 17.89, or 0.6%, to 2816.62. Within the index, 18 stocks fell, 21 rose and 11 were unchanged. Turnover was a lower-than-average $52.9 million.

Contact (NZX: CEN ) declined 2.2% to $5.67, bringing its slide this year to 19%. The utility today cut its earnings forecast for a second time, as surplus capacity in South Island hydro lakes and reduced demand from Tiwai Point weigh on wholesale prices.

Underlying earnings after tax will be 30% to 33% below last year’s $232.8 million. That’s a deterioration from its January prediction of a 23% slide in earnings and worse than its forecast last October for profit growth to stall.

“By taking a big user out you’ve got surplus generating capacity, not helped by higher-than-normal rainfalls,” said Stephen Walker, head of asset management at Goldman Sachs JBWere. “The market is going to have inefficiencies which can cost the generators.”

F&P Healthcare (NZX: FPH ) slipped 2.2% to $3.08. The medical equipment maker last month said full-year profit may be $75 million to $80 million, below the $100 million estimate from forecasts collated by Reuters. Research firm Morningstar has downgraded its forecasts after the company’s "very downbeat" guidance, according to the ShareChat website.

AMP NZ Office Trust (NZX: APT ) slipped 2.6% to 74 cents after the property investor said it received subscriptions for about $192 million of $201.3 million raised via its rights issue, leaving underwriters led by First NZ Capital to pick up about $9.5 million. ANZO chairman Craig Stobo said the response showed a strong take up.

ING Property Trust (NZX: ING ) was the biggest decliner of the NZX 50, falling 3.5% to 56 cents. Mainfreight (NZX: MFT ) slipped 3.2% to $4.21.

Infratil (NZX: IFT ) was the biggest gainer on the benchmark index, climbing 2.9% to $1.75, the highest in almost four months, after the investment group offered a call option over 19.9% of Energy Developments to a bidding group led by Archer Capital Pty Ltd. that’s made a takeover proposal to the Australian alternative energy company.

New Zealand Oil & Gas (NZX: NZO ) dropped 1.9% to $1.59 as the price of crude oil extended its decline on the strength of the U.S. dollar. Crude oil for July delivery fell as much as 1% to US$67.78 a barrel on the New York Mercantile Exchange.

Air New Zealand (NZX: AIR ) slipped about 1% to $1.03 after chief executive Rob Fyfe told an airline conference that demand for air travel is likely to deteriorate.

Fisher & Paykel Appliances (NZX: FPA ) rose 1.5% to 70 cents.

Businesswire.co.nz

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