MARKET CLOSE: NZ shares rise as Nuplex flags sale, Kathmandu gains
By Suze Metherell
Sept. 24 (BusinessDesk) - New Zealand shares rose, led by Nuplex Industries after it flagged a possible sale of two Australasian businesses. Kathmandu Holdings paced the gain, recovering from a decline after reporting weaker annual earnings yesterday.
The NZX 50 Index rose 16.729 points, or 0.3 percent, to 5258.172. Within the index, 20 stocks rose, 20 fell and 10 were unchanged. Turnover was $133.6 million.
Nuplex climbed 6.6 percent to a three-month high $3.22 after the chemicals manufacturer confirmed it's in talks with CHAMP Private Equity with a view to selling its Australasian agency and distribution business, Nuplex Specialties and the plastic additives business, Nuplex Masterbatch.
"Australia has been a deteriorating performer," said Rickey Ward, New Zealand equity manager at JB Were. Chief executive Emery Severin "had attracted the label as someone who wanted to go and acquire businesses and this is doing the opposite to that.
"This is the decision that that company is wanting to entertain someone who is looking to acquire some of their business, so it is more of a divestment of non-performing or poor-performing assets."
Kathmandu rose 3.2 percent to $3.20, more than making up from yesterday's 1.6 percent decline. The outdoor goods retailer reported a 5.4 percent fall in annual profit to $42.2 million, in line with guidance given, as a slow start to winter crimped sales.
The Christchurch-based company plans to invest $5 million to expand its business in the UK and Europe this financial year, in the first phase of a three-year strategy to build its global brand, which may dent earnings growth. Retailers, particularly those in the rag-trade, have come under increasing pressure from offshore, online retailers.
"It’s the one retailer that is doing particularly well," Wards said. "That's the one retailer that seems to be able to manoeuver its way through challenging times."
Listed electricity generator-retailers continued to gain on optimism after the general election delivered Prime Minister John Key and his government a third term, and the potential to govern alone shutting down the threat of more regulation, which had been a cornerstone policy for opposition parties in trying to drag down power prices for consumers.
Genesis Energy climbed for a fifth day, rising 2 percent to $2.03. Meridian Energy advanced 0.7 percent to $1.55.
"Utility stocks generally have a firmer feel to them," Ward said. "The market would now suggest it’s a dead duck, for want of a better word, that was this year's policy and the left didn't get elected, so it is impossible to implement in the near term and it is yesterday's story."
Infratil, which has a majority share in TrustPower, edged up 0.4 percent to $2.80, after 8.5 million of its shares, or 1.5 percent of the company, changed hands in a single trade, its biggest trade since January coincided with the price hovering above a six-year high.
Fletcher Building, New Zealand's largest listed company, fell 1.5 percent, or 13 cents, to $8.78 after shedding rights to its final 18 cents per share dividend, payable on Oct. 15. It announced today that it will close its unprofitable Crane copper tube manufacturing business in Australia amid increased competition.
The building company acquired the business when it took over the publicly listed Australian plumbing supply chain and plastic piping company Crane Group in early 2011 in a deal valued at $1.2 billion. Exiting the business will result in a $19 million expense in the current financial year ending June 30, 2015, the Auckland-based company said in a statement today.
Spark New Zealand, formerly Telecom Corp, fell 2 percent, or 6 cents, to $2.97 after shedding rights to its final 9 cents per share dividend.
Units in Fonterra Shareholders' Fund were unchanged at $6.29 after Fonterra Cooperative Group, the world's biggest dairy exporter, cut its forecast 2015 milk price payout by about 12 percent to $5.30 per kilogram of milk solids from a previous forecast of $6/kgMS, citing weaker global dairy prices. It lifted its forecast dividend payment to a range of 25-35 cents a share, from a previous projection of 20-25 cents. Annual net profit tumbled 76 percent to $179 million, which Fonterra attributed to "constrained margins" in its food service, consumer businesses and non-milk powder products. Units in the fund give holders access to the company's dividend stream.
Chorus rose 0.8 percent to $1.80. The telecommunications network operator will ask shareholders to hike the pool for directors' fees 12 percent to $1.1 million if it needs to bolster its board as it tries to limit the impact of regulation on its revenue streams.
Outside the benchmark index, Comvita increased 1.4 percent to $3.70. The Te Puke-based company, which produces health products derived from manuka honey, sees annual earnings growth of up to 32 percent, to between $9 million and $10 million. It expected profit to come from the second half, due to uneven sales between the northern and southern hemispheres, and after the honey harvest is collected between January and May next year, which will generate revenue from the beekeeping operations.
Michael Hill International, the Brisbane-based jeweller, rose 0.8 percent, or 1 cent, to $1.29, after it shed rights to its final 4 cents dividend, payable Oct. 3.