Fletcher Building drags down market

05:24, Feb 20 2013

The New Zealand share market lost ground today, almost perfectly erasing yesterday's gains, dragged down by disappointment in Fletcher Building.

Blue chip stock Fletcher Building lead the decliners after rallying yesterday, signalling market disappointment with its half year result, which was in line with analysts' expectations.

Fisher and Paykel Healthcare, the makers of breathing masks and respirators, rose on the back of its half year result.

The benchmark NZX 50 Index fell 29.97 points, or 0.70 per cent, to close at 4,214.24.

Within the index 22 stocks fell and 14 rose.

Fletcher Building, the country's biggest construction firm, led the market downwards, falling 4.83 per cent to $8.87 after announcing its half year result. Yesterday, market optimum saw it close at $9.32.

The market giant's earnings for the first half of its financial year were in line with expectations and highlighted the different market conditions on either side of the Tasman, share broker Forsyth Barr said following the result.

Improved trading conditions in New Zealand helped the trans-Tasman building materials group post marginally higher net earnings for the six months to December of $146 million, up from $144m at the same time the previous year.

"By contrast, in Australia, weak market conditions have continued in the residential and commercial construction sectors," chief executive Mark Adamson said.

Fletcher Building also revealed yesterday that it and its subsidiaries are owed $7.5m in the collapse of Mainzeal.

The next biggest decliners on the NZX50 yesterday were The Warehouse Group, the country's biggest listed retailer, which fell 3.68 per cent to $3.40, and Trustpower, the electricity company controlled by Infratil, which fell 3.68 per cent to $7.86.

Trade Me shares also slipped after the company revealed the number of "general items" sold through its core marketplace had fallen 3.8 per cent and retailers were slow to sell new goods through its website.

Shares in the online auction company fell 2.27 per cent to $4.31.

The company again outshone the revenue and profit forecasts originally set out in its 2011 prospectus thanks mainly to strong growth in other parts of the business, reporting a 3 per cent increase in its interim net profit to $37.4 million on the back of an 18 per cent jump in revenues to $80.4m.

Revenues from the sale of general items rose 7.5 per cent, but Deutsche Bank analyst Arie Dekker told Fairfax it was "a little concerning" that had mainly been because of an October fee hike. However he said today's drop had to be seen in the context of a good run before today's result.

Meanwhile Auckland International Airport, the country's busiest gateway, continued a five-day losing streak, falling 1.10 per cent to $2.71, having hit $2.94 late last week. The price fell after the New Zealand Super Fund announced had cut its "overweight" shareholding from 10 per cent to 2 per cent.

Leading the gainers on the local bourse was Fisher and Paykel Healthcare, the makers of breathing masks and respirators, which rose 7.69 per cent to close at $2.52.

Fisher and Paykel Healthcare upped its full-year earnings guidance thanks to strong second-half sales, with the NZX and ASX-listed medical equipment manufacturer saying that despite the continuing strength of the New Zealand dollar, it now expected net profit after tax for the year ending March 31 to be about $75 million - up on its previous upgraded estimate in November of between $69m and $72m.

The earnings upgrade followed encouraging second-half sales growth, chief executive Michael Daniell said, particularly for its respiratory products and its recently released Eson nasal mask and Pilairo nasal pillows mask.

Contact Energy, the country's biggest listed electricity company, rose for the second day in a row, gaining 2.86 per cent to close at $5.40 after yesterday's announcement of a half-year profit of $88 million, up more than 29 per cent on the same period last year.

On the currency markets the kiwi dollar fell sharply against the greenback after Reserve Bank Governor Graeme Wheeler told a gathering of manufacturers and exporters that the New Zealand dollar was "significantly over-valued" and that he would intervene when circumstances were right.

Wheeler said there was no easy solution to the decline in manufacturing, however the bank stood ready to intervene in the currency when appropriate, including using the OCR.

The kiwi dollar recently traded at US84.06 cents, down sharply from US84.80 cents at 8am.

On the Trade Weighted Index of major trading partners' currencies it was 76.80.

On the crosses, the kiwi recently traded at 81.15 Australian cents, down from A81.82c at 8am, 62.67 euro cents, down from 63.33c, 54.42 pence, down from 54.96p, and 78.540 yen down from 79.16 yen.

The 90 day bank bill rate was unchanged at 2.69 per cent.