MARKET CLOSE: NZ shares fall as Telecom cuts guidance

MARKET CLOSE: NZ shares fall as Telecom cuts guidance, Ryman gains of profit

May 16 (BusinessDesk) – New Zealand shares fell after Telecom said competition in fixed-line sales meant full-year earnings would be at the bottom end of guidance, while Ryman Healthcare rose after chalking up another year of plus-15 percent earnings growth.

The NZX 50 Index fell 10.29 points, or 0.2 percent, to 4636.02. Within the index, 26 stocks fell, 18 rose and six were unchanged. Turnover of $195 million was boosted by 1.7 percent of Trade Me changing hands.

Telecom dropped 2.7 percent to $2.55. At an investor briefing today, the company reiterated that adjusted earnings before interest, tax, depreciation and amortisation would be between $1.04 billion and $1.06 billion, but said it was more likely to be “near the bottom end of this range, primarily due to a further increase in price competition in the fixed line market and continued margin pressure in Gen-i.”

“We’re highlighting how quickly costs have to come out to keep pace with revenue declining,” said David Price, a broker at Forsyth Barr. Nothing was said at the briefing about dividends and Australian analysts have been pushing the stock on a yield basis.

Chorus, the network company spun off from Telecom in 2011, was unchanged at $2.75. The Wellington-based company this week said its total broadband connections increased to 1.09 million in the three months ended March 31 from 1.08 million at the start of the quarter. The biggest gains were in enhanced unbundled bitstream access and naked enhanced UBA.

Ryman rose 2.2 percent to $6.40 and has gained 37 percent this year. Full-year net profit rose 13 percent to $136.7 million. Underlying profit, which strips out unrealised movements in the value of its property portfolio and non-cash items, advanced 19 percent to $100.2 million, extending the company’s decade-long record of earnings growth of at least 15 percent.

“Operating cash flows were good and the outlook is pretty good,” Price said.

Fletcher Building fell 0.2 percent to $8.68 after the government unveiled plans to try and make housing more affordable by opening up the land bank to boost supply. Residential investment is seen as the driving force behind the economy in the coming years, with some $18 billion of housing to be built in Canterbury alone.

Trade me, the auction website, gained 1.2 percent to $5.20 with 6.8 million shares trading. The stock has gained 30 percent this year.

Units in the Fonterra Shareholder’s Fund rose 0.1 percent to $8 after Fonterra said it would pay its farmer shareholders $7.92 per economic right of each share they sold during the current supply offer.

Infratil fell 1 percent to $2.42 after subsidiary Wellington International Airport backtracked on its annual sales figures, saying most of its 20 percent lift in revenue was from a new noise levy, and not simply from the landing and terminal charges as stated in its statutory accounts.

Dorchester Pacific rose 3.7 percent to 28 cents after returning to profit with $1.7 million in the 12 months ended March 31, beating earlier guidance of $1.6 million. The former finance company that managed to survive a string of collapses in the sector has diversified its business into debt collection and insurance to broaden its earnings base.

(BusinessDesk)

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