NZ stocks fall, Cavalier pace decliners on profit warning

By Hannah Lynch

Nov. 18 (BusinessDesk) – New Zealand stocks fell, paced by Cavalier Corp after the carpet maker slashed its forecast earnings for the full year due to tepid consumer demand and surging wool prices.

The NZX50 fell 28.84 points, or 0.9 percent, to 3250.89. Within the index 30 stocks fell, 6 rose and 14 were unchanged. Turnover was $94.3 million.

Cavalier fell 4.2 percent to 2.54 after slashing its forecast earnings by as much as half from the previous year’s profit. That makes it the latest in a string of companies to cut their earnings guidance, including Fletcher Building, Sky Network Television and Methven.

Shane Solly portfolio manager Mint Asset Management said the weak demand for carpets amid the global economic downturn has sapped households’ appetite for major renovations and purchases.

“Clearly the downgrade is telling us things are challenging out there,” he said.

Stocks fell in Australia, with weak financial stocks part of a downward theme, and adding to the negative tone in New Zealand. Australia’s S&P/ASX 200 index was down 1.7 percent in afternoon trading.

Solly said, the declines were smaller than those in the Northern Hemisphere as the Australian and New Zealand markets are holding their own.

Duel listed financial stocks including Westpac Banking, Australia and New Zealand banking and AMP all declined. Westpac fell 2.7 percent to $26.85, ANZ fell 3.1 percent to $26.35 and AMP was down 0.7 percent to $5.60.

Gold miner OceanGold was the biggest decliner, falling 5.7 percent to $2.98.

Shares in Telecom fell 3 percent to 2.45 as the separation date of its retail and network businesses draws nearer. The phone company still has some outstanding issues to deal with, after the Supreme Court ruled that the Commerce Commission made an error in the law it set for levies in the company’s unprofitable rural phone services. That potentially leaves the phone company open to refunding levies paid under the now-defunct Telecommunications Service Obligations.

“There are still question marks about Telecom,” said Solly.

Kathmandu shares dropped 1.3 percent to $2.57 after the outdoor equipment retailer said sales rose 16 percent to $56 million in the latest quarter.

Jeweller Michael Hill International was the biggest gainer rising 1.1 percent 90 cents.

Guinness Peat Group was unchanged at 62.5 cents after the investment company announced it sold off six assets for a total of 34 million pounds through the latter half of the year.

(BusinessDesk)