MARKET CLOSE: NZ stocks fall; Nuplex paces decliners

MARKET CLOSE: NZ stocks fall; Nuplex paces decliners, Cavalier gains

By Jason Krupp

May 12 (BusinessDesk) - New Zealand stocks snapped six days of gains, with Nuplex Industries Ltd. pacing decliners after it issued a profit warning. Cavalier Corp. rose.

The NZX 50 Index fell 18.55 points, or 0.5%, to 3,540.31. Within the index, 33 stocks fell, seven rose, and 10 were unchanged. Turnover was $125.9 million.

Nuplex, the chemical and resigns manufacturer, fell 2.5% to $3.08. The company said it now expects net profit for the year ended June to be between $62 million and $65 million on the back of restructuring charges and rising raw material costs.

That follows a February earnings downgrade when the company announced a 10% drop in first-half net profit, and said annual net profit was expected to be between $68 million and $75 million.

"Most investors had been expecting the risk of further profit downgrades," said Shane Solly, portfolio manager at Mint Asset Management. "They've also been impacted by weather events - the floods in Australia - and the slow pickup in consumer demand in Australia and New Zealand, so it's not all about commodity price exposure."

APN News & Media Ltd., the publisher of the New Zealand Herald and operator of the Radio Network, fell 6.4% to $1.90. The Australian company today appointed Warren Bright as new chief executive of its regional division in Australia, a newly created role that forms part of a restructuring of the company aimed improving profitability.

The appointment comes after the company last week warned that first-half earnings before interest and tax for the six months ending June would be between A$15 million and A$20 million lower than the previous first-half. APN’s first-half EBIT last year was A$87.1 million.

Tower Ltd., the general insurer controlled by Guinness Peat Group, fell 3.2% to $1.81 after papers released by the Treasury showed officials were concerned that as many as three insurance companies could collapse as a result of the Christchurch earthquake.

As a result, AMI was extended a $500 bailout facility by the government after it said it may not be able to meet claims relating to the disaster, Western Pacific was allowed to fail, and the third insurer was not named. While the third is unlikely to be Tower, the move is seen as a blow to confidence in the sector.

Air New Zealand Ltd., the national carrier which is in the midst of a price fixing trial, fell 1.7% to $1.13.

Australian airline Qantas Airways Ltd. was ordered to pay a fine of $6.5 million and costs of $100,000 for its role in fixing air cargo prices, in the High Court at Auckland yesterday. Qantas has already cut deals and paid fines in the U.S., Australia, Canada, Korea and Europe.

Air NZ, which has had several similar charges dismissed by regulators in other regions, has consistently denied wrong doing.

Cavalier, the listed carpet maker, rose 2.3% to $3.58, leading gainers on the exchange. The stock is rated as "outperform" according to a consensus poll of 4 analysts compiled by Reuters. The stock has risen 15% so far this year.

"There has been more interest in these mid-tier stocks on NZX," Solly said. "People are starting to look at the nascent recovery and asking 'how do I get exposure to that?'."

Telecom Corp., the country's biggest phone company, rose 0.8% to $2.33, its highest level in over a year, with the stock seeing increased interest in Australia as investors shifted their holdings out of resources and into telecoms, Solly said.

(BusinessDesk)

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