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

 


MARKET CLOSE: NZ shares fall, led by Warehouse

MARKET CLOSE: NZ shares fall, led by Warehouse after profit warning

By Tina Morrison

June 20 (BusinessDesk) - New Zealand stocks fell, led by Warehouse Group after the country's largest listed retailer cut its full-year profit forecast.

The NZX 50 Index slid 47.122 points, or 0.9 percent, to 5145.032. Within the index, 38 shares fell, seven rose and five were unchanged. Turnover was $227 million.

Warehouse was the worst performer on the benchmark, dropping 7.8 percent to a 17-month low of $3.06. Warehouse said it expects adjusted full-year profit of $59 million to $62 million, down from its March forecast for $67 million to $71 million, and lower than last year's $73.7 million.

Warehouse, which makes about 70 percent of sales from its 'red shed' general discount stores, said it was selling seasonal stock at reduced margins to avoid having too much left at the end of the season. The company, which is acquiring other businesses in an attempt to grow earnings outside of its 'red sheds', said Torpedo7, which is being integrated with R&R Sport, No.1 Fitness and Shotgun.co.nz, also failed to meet profit expectations as sales lag forecasts.

"Clearly Warehouse has been the focus of attention today," said Rickey Ward, NZ equity manager at JBWere in Auckland. "Investors are trying to figure out if it is confirmation that the 'red sheds' is mature and therefore confirmation that their diversification strategy away from the reliance on that is prudent."

Financial analysts who follow the company will probably pare back their forecasts for the company's 2015 profit from about $78 million to closer to $70 million, Ward said. Concerns are also growing that the company's dividend may not be sustainable, he said.

In March, Warehouse committed to a minimum dividend of 19 cents per share over the next two years as it moves to a lower payout ratio of between 75-85 percent of adjusted profit, from a previous policy of 90 percent of adjusted profit.

The company is likely to be paying out more profit than it earns, Ward said.

Other stocks on the bourse have declined as investors realised profits heading into earnings season on concern about whether valuations are justified, Ward said.

"The market has had a weaker tone across the board," he said. "Some stocks that have performed pretty well over the last couple of days are giving up some of those gains. There is a bit of profit taking going. You are coming into result season in just over a month and people are starting to question the valuations so I think there is a bit of a 'risk off' mentality going on in the market at the moment."

Diligent Board Member Services fell 3.7 percent to $4.40 after the governance app maker posted a 58 percent rise in first quarter profit as it increased the number of Diligent Boardbooks users. The stock closed at a 7-week high yesterday ahead of the earnings release.

PGG Wrightson gained 1.2 percent to a week high of 42 cents after the rural services firm late yesterday said full-year earnings exceeded its guidance even in the face on unfavourable weather and announced the $30 million purchase of a company that owns properties it leases.

Fletcher Building, the largest New Zealand company on the benchmark, dropped 1.9 percent to $8.82. Telecom Corp, the nation's largest telecommunications company, slid 0.7 percent to $2.68.

OceanaGold Corp led gainers, up 11 percent to $3.75.

Off the market, Scales Corp, the fruit and vegetables logistics group, said it is seeking up to $186.5 million in a July initial public offer, which aims to raise $30 million of new capital and let its major shareholder, private equity firm Direct Capital, sell down its stake. The Christchurch-based company will sell up to 100.8 million shares at an indicative price range of between $1.60 and $1.85 per share.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news