MARKET CLOSE: NZ shares dragged lower by Fletcher Building on B+I writeoffs
By Sophie Boot
Feb. 14 (BusinessDesk) - New Zealand shares were mixed as Fletcher Building plunged 9.3 percent after the company
unveiled further provisions at Building + Interiors (B+I) that bring two-year losses at the unit to $952 million.
The S/NZX50 Index fell 63.42 points, or 0.8 percent, to 8,058.8. Within the index, 23 stocks rose, 20 fell and seven were
unchanged. Turnover was $226 million.
Fletcher Building fell 9.3 percent to $7.05. Ralph Norris will step down as chair after the company took a further $486
million provision for project losses at its B+I unit and said 14 of the unit's 73 projects, worth $2.3 billion, are
loss-making or 'on watch'. It said it has obtained a waiver from its commercial banking syndicate after breaching the
terms of its loans, and aims to finish renegotiations by the end of March.
"The magnitude of the extension of the losses in the B+I unit has shocked the market but I'm surprised how well the
share price has performed," said Peter McIntyre, investment adviser at Craigs Investment Partners. "Today it's trading
down nearly 10 percent, potentially the damage to the share price could have been a lot higher, and turnover has been
"Whether the shareholders are in for a capital raising is questionable at the moment - they may well be. There's no
doubt it is going to get downgraded, they've essentially wiped B+I off and it was an essential part of the business.
Analysts will be hurriedly writing reports right through tonight.
"I think the market will be very wary of execution from management, a lot of trust has gone. It's going to be a volatile
trading period until that March date, until that gets resolved. The cost of funding will increase for Fletchers, there's
no doubt about that."
Metro Performance Glass dropped 4.5 percent to 85 cents and Restaurant Brands New Zealand fell 2.6 percent to $7.15.
Infratil was the best performer, up 2 percent to $3.14, with Investore Property rising 1.4 percent to $1.43 and
Kathmandu Holdings gaining 1.3 percent to $2.34.
Genesis Energy gained 0.4 percent to $2.39. It lifted first-half earnings 28 percent as low hydro-lake levels in the
South Island boosted the company's demand for wholesale electricity. Earnings before interest, tax, depreciation,
amortisation, and fair value adjustments, the favoured measure of power companies, rose to $199.5 million in the six
months ended Dec. 31 from $155.7 million a year earlier
"It was a pretty reasonable result all-in-all, much as expected and a good ebitdaf lift," McIntyre said. "Ebitdaf is
where most analysts and brokers would look at the result, because of the high amount of depreciation that runs through
Synlait Milk gained 0.2 percent to $6.62. It has signed a new five-year supply agreement for increased volumes of
packaged infant formula with its cornerstone shareholder Bright Dairy.
CBL Corp remained in a trading halt at $3.17. It is hiring advisers to sell the French construction insurance division
which has seen it fall foul of regulators over solvency concerns, and is pursuing legal action against the vendors of
Securities and Financial Solutions Europe SA (SFS).