Earnings starts strong but NZX 50 falls

New Zealand's main share index edged lower on Thursday as earnings season kicked off with a strong result from Vulcan Steel, with some larger stocks weighing on the benchmark.

Thursday, February 10th 2022, 7:05PM

by BusinessDesk




The S&P/NZX 50 Index fell 20 points, or 0.2%, to 12,413.05. Turnover was $199.9 million.

Two heavyweight stocks held the market back: Auckland International Airport – which accounts for almost 7% of the index – dropped 2% to $7.38, and Ryman Healthcare, the 10th largest stock, fell 1.2% to $9.88. 

Peter McIntyre, an investment adviser at Craigs Investment Partners, said investors were generally expecting a positive earnings season, despite the index being a touch weaker. 

“I think there's quite a strong expectation that the New Zealand market will perform well this earnings season,” he said.

Dual-listed Vulcan Steel climbed 1.8% to $10.18 on the NZX after it reported first-half revenue up 35% and an 85% rise in net profit.

The steel distribution company raised its full-year earnings guidance by about 11% to between $194 million and $204m.

McIntyre said other listed steel companies benefitted from the strong report, with Steel & Tube Holdings up 6.6% at $1.62 and Fletcher Building unchanged at $6.50.

Sanford shares climbed 4.7% to $4.87 after the fishery firm said it cleared its frozen inventories and benefitted from higher wildcatch prices in the December quarter.

McIntyre said that positive update also helped NZ King Salmon’s shares climb 3% to $1.02.

“We saw today from Sanford’s first-quarter update that salmon pricing had held up really well through the recovery, and that bodes well for New Zealand King Salmon,” he said

Electronic components manufacturer Rakon upgraded its earnings guidance today to be in the range of $49m to $53m, up from a forecast of $44m to $49m. Its share price climbed 2.2% to $1.90. 

Forsyth Barr’s equity analysts dropped Serko’s target price by more than a quarter, from $8.20 to $5.99, citing the impact from omicron and disappointing transaction volumes. 

“We make a material cut to our target price as we take a more pessimistic view of Serko’s ability to capture the European small-to-medium enterprise market,” said analyst Jamie Foulkes. 

Shares in the travel booking company were down 1.5% at $5.42 today but have fallen more than 20% in the past six months.

Ebos shares climbed 0.8% to $40.98 today, after Forsyth Barr analysts said they expect “minimal surprises and a strong result” when it reports half-year earnings on Wednesday.

“Ebos is widely supported by the broker community as a stock that's going to perform well in 2022,” McIntyre said.

The NZ dollar was trading at 66.82 US cents at 3pm in Wellington, up from 66.43 cents yesterday.

Traders will be closely watching US consumer price data being released on Thursday night for further signs of accelerating inflation. 

The inflation data will help set expectations for how the US Federal Reserve will set monetary policy at its meeting in March.

An unexpectedly high number – above 7.3% headline inflation – could send interest rates higher and push the NZ dollar lower.

Tags: Market Close

« NZ shares step higher ahead of earningsHot inflation sends NZ shares falling »

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