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The Markets

Investors hard on soft earnings as NZ sharemarket continues to slide

A dogged New Zealand sharemarket, again falling more than half a percent, continued to show no mercy on soft earnings updates, with KMD Brands (formerly Kathmandu) hitting an all-time low.

Tuesday, February 20th 2024, 9:43PM

by BusinessDesk

The S&P/NZX 50 was on a gradual decline all day and closed at 11,571.22, down 82.05 points or 0.7%. The index has fallen on nine of the last 11 trading days and is down 2.5% so far this month.

There were 78 decliners and 49 gainers on the main board with 30.72 million shares worth $110.56m changing hands.

KMD Brands, which listed as Kathmandu in 2009, declined 7c or 11.29% to a new low of 55c after telling the market that group sales are expected to fall 14.5% to $469m for the six months ending January because of “ongoing weakness in consumer sentiment”.

Kathmandu store sales are forecast to fall 21.5% (up 51.2% in the previous corresponding period); Rip Curl down 9.2% (up 18.8$%); and Oboz shoes declining 20% (up 124.3%).

A previous low share price was 78c on March 1, 2020, and the company changed its name to KMD Brands in mid-March 2022.

Fellow retailer The Warehouse, down 10c or 7.19% to $1.29, joined KMD at its all-time low.

Greg Smith, head of retail with Devon Funds Management, said the expected fall in KMD group sales is a big dent and there’s further consumer sentiment challenges ahead for them with people coming off low mortgage rates.

Tourism Holdings was down 17c or 4.76% to $3.40 despite a 72% rise in half-year revenue to $449.2m and 58% increase in net profit to 39.73m, with strong performance from global campervan rentals. It is paying an interim dividend 4.5c a share on April 5.

Tourism Holdings is expecting full-year net profit of about $75m with rental demand and yields continuing to outperform expectations but there is uncertainty around retail vehicle sales. The company is still aiming to deliver $100m net profit in the 2026 financial year.

Smith said the Tourism Holdings' result was “a touch softer than expected” and though rental yields were strong, they are normalising and the company flagged volatility in sales. It’s becoming more difficult selling campervans over $200,000.

Investors not forgiving

He said investors will seize on any caution and the start of this earnings season has been mixed. “There have been some misses, with Ryman Healthcare the big one. The market is in no mood for disappointment.”

Mercury Energy, which merged the Trustpower retail business, was up 11c to $6.795 after reporting a 23% increase in revenue to $1.6 billion and net profit of $174m, down 27%, for the six months ending December. It is paying an interim dividend of 9.3c a share on April 2.

Operating earnings (ebitdaf) were $434m, down 4% compared with the previous corresponding period. Electricity generation was 4486GWh, down 7%, and included a 40% increase in wind generation to 1109GWh. Mercury has lifted its full-year operating earnings to $880m, from the previous guidance of $835m.

Ryman Healthcare was down a further 33c or 6.76% to $4.55 on trade worth $20.1m; Oceania Healthcare declined 3c or 4.69% to 61c; and a2 Milk gave back 17c or 2.77% to $5.97.

Summerset Group, down 10c to $10.92, is considering making a $75m, six-year bond offer, with the ability to accept up to $50m of oversubscriptions.

Ebos Group fell 91c or 2.48% to $35.80; Auckland International Airport was down 10.5c to $8.045; Air New Zealand decreased 1c to 61c; CDL Investments declined 3.5c or 4.79% to 69.5c; and NZME was down 4c or 4% to 96c.

Manawa Energy was up 7c to $4.19; PGG Wrightson rebounded 11c or 3.56% to $3.20; Fletcher Building gained 3c to $3.51; and 2 Cheap Cars increased 4c or 4.94% to 85c.

Steel & Tube was down 4c or 3.48% to $1.11 after reporting a 17% decline in half-year revenue to $261.75m and a sharp fall in net profit to $5.35m, with subdued volumes across all its segments. It is paying an interim dividend of 4c a share on March 28.

Winton Land, unchanged at $2.47, had an 8% decline in half-year revenue to $85.62m and a 72% fall in net profit to $39.73m. It is paying an interim dividend of 0.55c a share on March 12. Winton settled 158 units for $85.6m in that six-month period, down 7.7% from the previous corresponding period.

Tags: Market Close

« Sharemarket drama as reporting season resumesNZ sharemarket turns positive after days of decline »

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