Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


MARKET CLOSE: Investors like Telecom, Contact job cuts

MARKET CLOSE: Investors like Telecom, Contact Energy job cuts; more to come

By Pattrick Smellie

Feb. 22 (BusinessDesk) – New Zealand equities stormed past 2,200 on the NZX50 Index, recovering ground lost since mid-January despite a mixed first full week of corporate earnings as Telecom Corp became the latest big corporate to announce big job cuts.

The NZX50 index of leading stocks rose 44.175 points, or 1.059 percent to 4,214.603, a level not seen since Jan 18, when there was a surge of pre-earnings season optimism about earnings quality. Total turnover was unusually heavy at $200.5 million, at the end of the biggest week of the mid-year earnings season.

Within the index, 26 stocks rose, 17 fell and seven were unchanged.

Pre-season optimism had looked in danger of being snuffed out this week as leading stocks either disappointed or only just made earnings guidance.

However, announcements of job cuts in both New Zealand and Australia by heavyweights such as Fletcher Building gave investors heart that senior managers had strategies to deal with sub-par earnings in the weak New Zealand economy.

Fletcher, Telecom and Contact Energy, together worth 26.3 percent of the NZX50, all rose after announcing hundreds of job cuts along with barely adequate earnings, as institutional investors saw evidence of companies with plans to improve earnings.

“We’ve got more to go. We’ve just started the process,” said Shane Solly at Mint Asset Management. “We’ve been concerned that there’s been a bit of phony war going on” in New Zealand, with large employers delaying lay-offs until signs of an improving economy emerged.

A lot of the job losses in coming months would be in middle management, Solly said.

“It’s not the man in the street, it’s their bosses.”

Telecom was the third strongest riser today, up 3.85 percent to $2.29. After taking a pummeling earlier in the week and earning a “reduce weighting” call from analysts Morningstar, Fletcher rallied 1.52 percent today to close at $8.68. Chief executive Simon Moutter foreshadowed a “fair, fast and fearless” restructuring in the next 10 months to refocus the company to mobile and data services.

Contact, at 4.3 percent of the NZX50, surged during the trading day, although it finished only 1.73 percent up for the week after reporting solid half year earnings and a plan to cut 10 percent of its staff of 1,100.

Fletcher, which has bigger problems in Australia than New Zealand where Auckland activity and the Christchurch rebuild are raising demand, closed the week up

However, leading the index higher on surging world gold prices was Oceana Gold, spiking 8.05 percent to $2.82, while New Zealand big shed retailer Warehouse Group also made a strong showing, up 4.17 percent to $3.50.

AMP earnings announced to the ASX this morning disappointed the market, and saw the stock lead fallers on the index, 3.11 percent to $6.55.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

China Shopping: NZ-China FTA Upgrade Agreed Among Slew Of New Deals

New Zealand Prime Minister Bill English and China Premier Li Keqiang signed off a series of cooperation deals spanning trade, customs, travel and climate change and confirmed commencement of official talks on an upgrade to the nine-year old free-trade agreement between the two countries. More>>

ALSO:


Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news