NZ shares extend decline as earnings underline shaky economy

New Zealand shares fell for a fourth day as the rush of company earnings, such as SkyCity Entertainment Group, showed the tough economic conditions firms have been operating under.

Thursday, August 22nd 2024, 6:26PM 1 Comment

by BusinessDesk

The S&P/NZX 50 Index declined 33.62 points, or 0.3%, to 12,469.35. Across the main board, 54 stocks fell, 84 rose, and 41 were unchanged. Turnover was $109.8 million, with ten companies trading on volumes of more than a million shares.

The upcoming speech from US Federal Reserve chair Jerome Powell on Friday at the global central banker symposium in Jackson Hole, Wyoming, remained front of mind for investors as they pondered how quickly interest rates would be cut.

Local stocks

Meanwhile, the local earnings season kicked up a gear with SkyCity, Genesis Energy, Auckland International Airport and Seeka reporting on Thursday and continuing the volatility in results.

“So far, there have been more misses than beats, and it’s still a bit hazy out there,” Shane Solly, portfolio manager at Harbour Asset Management, said. “People are digesting and going through a lot of results, and we’re seeing the market chopping around.”

SkyCity paced the benchmark index’s decline, falling 2.5% to $1.55. The casino operator sank into the red as it wrote down the value of its Adelaide operation and booked a charge on the government’s change to tax depreciation rules. Underlying earnings were weaker, and the prospect of stricter gambling regulations weighed on SkyCity’s outlook.

Harbour’s Solly said SkyCity was below its recent guidance, and the introduction of mandatory carded play would hit the casino’s near-term growth.

“It’s certainly holding them back,” he said.

Auckland International Airport slipped 0.4% to $7.53. The country’s major gateway lifted underlying earnings by 87%, and its activity was at 91% of pre-covid levels.

Genesis Energy was unchanged at $2.52 after reporting a 22% slide in annual earnings, with rising fuel costs squeezing margins.

Energy companies have been under pressure as low hydro lake levels drove spikes in wholesale electricity prices, and system operator Transpower on Thursday said it would let some hydro generators operate below their usual levels if a security of supply alert was triggered.

Meridian Energy fell 1.9% to $6.38, Contact Energy increased 0.1% to $8.80, Mercury NZ advanced 0.3% to $6.60 and Manawa Energy rose 0.5% to $4.

Seeka climbed 8% to $2.70 after the kiwifruit grower reported a 63% increase in first-half profit, with increased kiwifruit volumes on both sides of the Tasman.

Synlait Milk dropped 8.7% to 42 cents on a volume of 1m shares. On Thursday, the milk processor said it’s in the final stages of reviewing its Pokeno facility and North Island assets and noted a report by BusinessDesk that Open Country Dairy was poised to buy Synlait’s North Island milk supply.

The a2 Milk Co, which has agreed to participate in a $217m capital raising by Synlait, rose 2.7% to $6.37, while Fonterra Shareholder Fund units increased 0.5% to $4.49.

Chorus rose 2.5% to $8.10 after the Commerce Commission approved an expenditure of $1.72 billion.

Vista Group International posted the biggest decline on the NZX50, falling 3% to $2.88. The cinema software analytics firm is still up 19.5% this month after reporting fatter first-half margins and projecting a stronger end to the financial year.

Freightways posted the biggest gain on the benchmark index, up 2.9% at $9.52. This week, the courier and information management firm reported a 5.8% decline in annual profit while eyeing better economic outlooks in Australia and NZ for 2025.

KMD Brands climbed 5.7% to 57 cents on a volume of 2m shares. The retailer this week said sales were improving when it reaffirmed earnings guidance, while Australian-listed rival Super Retail Group said its Macpac and BCF camping chain reported stronger trading.

Among companies reporting on Friday, Channel Infrastructure rose 0.6% to $1.57, Spark NZ slipped 1.2% to $4.29 on a volume of 1.6m, Winton Land was unchanged at $2.11, and NZX decreased 0.7% to $1.37.

Precinct Properties NZ was the most heavily traded stock, rising 1.2% to $1.315 with 3.6m shares changing hands. Kiwi Property rose 1% to 97 cents on a volume of 2.8m, and Fletcher Building fell 0.9% to $3.28 with 2.4m shares traded.

Tags: Market Close