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MARKET CLOSE: NZ stocks rise; NZ Refining leads on outlook

MARKET CLOSE: NZ stocks rise; NZ Refining leads gainers on profit forecast

By Jason Krupp

Dec. 17 (BusinessDesk) - New Zealand stocks rose, led by New Zealand Refining Co. after the country's only oil refinery doubled its profit forecast on the back of an unexpected rise in refining margins, while Fisher & Paykel Appliances Holdings paced decliners.

The NZX 50 Index rose 31.33 points, or 0.94%, to 3,325.11. Within the index, 31 stocks gained, 11 declined and eight were unchanged. Turnover was $152.5 million.

NZ Refining rose 7.8% to $4.42 after it said net profit for the calendar year will be in the range of $55 million to $65 million, up from $23.6 million in 2009 on better than expected margins. The average refining margin earned in the 10 months ended Oct. 31 was US$6.03 and since then has tracked in a range of US$6 to US$7.50.

"Oil prices have been rising steadily and the better margins in the refining business just equates to better numbers for NZ Refining," said Stuart Hardie, an adviser at Craigs Investment Partners.

Rakon Ltd., the maker of crystal oscillators used in cellphones and GPS units, rose 7% to $1.23, Infratil Ltd., the infrastructure investment company, rose 3.2% to $1.92, and APN News & Media Ltd., which publishes the New Zealand Herald and operates the Radio Network, rose 2.8% to $2.58.

Telecom Corp., New Zealand biggest telephone company, rose 2.8% to $2.23 after the Commerce Commission recommended regulatory relief for its resale services, where the phone company's products are repackaged and on-sold by rivals.

The regulator said services that aren't popular with customers and have strong competition should be deregulated, while services that have significant uptake and have limited alternatives should stay regulated. The decision comes as Telecom took a box seat in the race for government funding of the high-speed internet roll-out, getting priority billing for 25 regions, including Auckland.

Fisher & Paykel fell 8.8% to 52 cents after the whiteware manufacturer slashed its earnings guidance, citing deteriorating retail trading conditions and weaker third-party sales of components and technology.

Full-year earnings before interest and tax will be $15 million to $25 million for the company's appliances division, down from the range of $28 million to $35 million it gave with its first-half results on Nov. 26. The forecast for its finance business was unchanged at EBIT of about $35 million.

Hardie said companies reliant on the retail dollar are facing a challenging time, as consumers keep a tight grip on their wallets amid the slack pace of economic recovery.

"A lot of them are hanging on by the skin of their teeth," Hardie said. "This period is vital for them, and many of them have been having pre-Christmas sales which are eroding their margins on what should be their most profitable time."

PPG Wrightson Ltd., the rural services company, fell 8.3% to 44 cents after it also revised its earnings forecast downwards, with the slow recovery in the agricultural sector, the disposal of the NZ Farming Systems management contract and increased debt provisioning weighing on earnings.

Earnings before interest tax depreciation and amortisation for the year are forecast to come in at between $58 million to $61 million, compared to an EBITA of $70.5 million reported in the last financial year. As a result full year net profit has been revised downwards to between $15 million and $18 million, compared with $23 million earned previously.

Xero Ltd., the maker of online accounting software, fell 0.4% to $2.38. The company today announced that Sam Knowles, the businessman who headed Kiwibank for ten years, will be joining the board.

Pumpkin Patch Ltd., the children's clothing retailer, fell 3% to $1.63, Pyne Gould Corp., the financial services company, fell 2.7% to 36 cents, and Argosy Property Trust, the property investor, fell 1.4% to 70 cents.


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