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

 

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Women's Affairs: Government Accepts Recommendations On Pay Equity

The Government will update the Equal Pay Act and amend the Employment Relations Act to implement recommendations of the Joint Working Group on Pay Equity. More>>

ALSO:

Immigration: Increase In Seasonal Workers For RSE

The current cap will be increased by 1,000 from 9,500 to 10,500 RSE workers for the 2016-17 season. Mr Woodhouse says the horticulture and viticulture industry is New Zealand’s fourth largest export industry, producing almost $5 billion in exports. More>>

ALSO:

Hurunui: Crown Irrigation Invests Up To $3.4m In North Canterbury

Crown Irrigation Investments will invest up to $3.4m in the Hurunui Water Project, an irrigation scheme that will be capable of irrigating up to 21,000 hectares on the south side of the Hurunui River in North Canterbury. More>>

ALSO:

Not So Great:Butterfly Eradication Success

The invasive pest great white butterfly has been eradicated from New Zealand in a world-first achievement, Primary Industries Minister Nathan Guy and Conservation Minister Maggie Barry say. More>>

Gordon Campbell: On The Government’s Tax Cuts Fixation

Long before the earthquake hit, the dodginess of the government tax cuts programnme was evident in the language of its packaging. It is being touted as a “tax cuts and family care” package... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news