Market close: Solid company results fail to ignite index

The New Zealand sharemarket couldn’t be stirred from its malaise by a batch of solid company results and updates as it heads towards its worst-performing year in a decade.

The S&P/NZX 50 Index had its third successive significant fall, finishing down 37.07 points or 0.29 per cent to 12,800.33. There were 43 gainers and 101 decliners across the whole market on volume of 37.73 million share transactions worth $146.32 million.

The index has now fallen nearly 2.3 per cent year to date and is tracking well below 2011 which produced a fall of 1.04 per cent. In between, the NZ 50 Gross Index has climbed an average 16.87 per cent annually, with the best being a 30.42 per cent rise in 2019 and 22.04 per cent in 2017.

So far this year, the Australian S&P/ASX 200 Index has risen nearly 13 per cent and the leading United States indices are more than 20 per cent ahead.

Dan Stratful, investment adviser with Forsyth Barr, said the New Zealand market is going to have a very average return this year but “we have to put it in perspective – it has had outstanding results in the past decade.”

“Wholesale interest rates are reaching new highs – they just keep climbing week after week – and are providing headwinds for the market, especially for the dividend income utilities and property companies.

“The outlook is that the economy will have a strong pick-up next year and perhaps that will provide a backdrop for the market in the New Year,” Stratful said.

Turners Automotive and Sanford, on different extremes of the economic barometer, produced contrasting half-year results. Turners, up 13c or 2.97 per cent to $4.50, is benefiting from pent-up consumer spending and primary exporter Sanford is struggling with chain supply disruption.

Turners’ net profit increased 26 per cent to $16.9m on revenue of $166.8m, up 13 per cent for the six months ending September. It is making a second-quarter dividend of 5c a share confirmed a full-year 22c a share pay-out.

Turners said it was on track for a full-year 15 per cent increase in net profit to $43m but because of the Covid lockdown it is now expected to be $40m-$42m. October and November showed strong signs of recovery, with vehicle sales ahead of the same period last year.

Sanford, the country’s largest seafood company, gained 9c or 1.88 per cent to $4.89 even though its half-year net profit fell 16.4 per cent to $16.23m on revenue of $489.62m, up 4.43. Sanford has suspended its dividend, but investors were heartened by the update that wildcatch and salmon profitability is improving and mussel inventory has normalised.

AFT Pharmaceuticals rose 18c or 3.87 per cent to $4.83 after reporting a 127 per cent rise in net profit to $5.49m on revenue of $55.51m, up 14 per cent, for the six months ending September. AFT is now selling its Maxigesic pain relief medicine in 47 countries and has registration in 51 countries. Its full-year operating profit forecast remains at $18m-$23m.

Transport technology firm EROAD surged 28c or 5.57 per cent to $5.31 after receiving Commerce Commission clearance to buy Auckland-based Coretex, which will accelerate growth by two years, particularly in the US and Australia.

Amongst the interest rate-sensitive stocks, Investore Property fell 5c or 2.59 per cent to $1.88; Property for Industry was down 2.5c to $2.855; but Goodman Property Trust was up 4c to $2.47.

Mercury fell 6 to $5.94; Genesis was down 3c to $3.03; but Contact gained 19c or 2.42 per cent to $8.05 on trade worth $24.18m, and Trustpower was up 15c or 2.03 per cent to $7.55.

Vector has completed its $225m six-year bond issue with an annual interest rate of 3.69 per cent, and its share price was unchanged at $3.97.

Fisher and Paykel Healthcare was down 13c to $31.37; Mainfreight declined $1.12 to $90.31; Auckland International Airport decreased 10c to $8.15; Delegat Group fell 38c or 2.6 per cent to $14.22; and Serko shed 12c to $7.87

Vulcan Steel fell 15c or 1.86 per cent to $1.46; Fonterra Shareholders’ Fund declined 8c or 2.11 per cent to $3.72; Synlait Milk decreased 4c to $3.46; and Gentrack was down 6c or 3.21 per cent to $1.81.

The a2 Milk Company increased 7c to $6.34; Air New Zealand was up 1.5c to $1.66; Just Life rose 5c or 6.17 per cent to 86c; Rakon rose 5c or 3.11 per cent to $1.66; and Foley Wines gained 3c or 1.88 per cent to $1.63.

Hospitality group Savor climbed 7.5c or 17.86 per cent to 49.5c after increasing its revenue from $4.87m to $17.5m in the six months ending September. The latest Covid lockdown pushed Savor into a loss of $753,000 but operating earnings were $2.1m.

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