Index follows Australian market lower

Comvita shares dropped 11.4 per cent after it warned of a first-half loss at its shareholder meeting yesterday. Picture / File
Comvita shares dropped 11.4 per cent after it warned of a first-half loss at its shareholder meeting yesterday. Picture / File

New Zealand shares fell yesterday, following the Australian market lower as Comvita suffered from weaker sales, while A2 Milk Co and SkyCity Entertainment Group dropped.

The S&P/NZX 50 Index fell 106.67 points, or 1.5 per cent, to 6,896.2. Within the index, 41 stocks fell, five rose and four were unchanged. Turnover was $124 million.

"The index is being dominated by the inflation data out of Australia today which was a bit stronger than expectations," said Craig Stent, a director at Harbour Asset Management. "The likelihood of them cutting rates is a lot lower now."

The S&P/ASX 200 Index closed down 1.5 per cent yesterday.

Comvita led the index lower, down 11.4 per cent to $9.44. The manuka honey and health products company warned its first-half result is likely to be a loss after tough trading in the first quarter of the 2017 financial year resulted in an unexpected drop in sales.

"It's disappointing for a growth company, clearly the channels into China have slowed a bit, though they did say there had been a bounceback of late," Stent said. "It's disappointing given the expectation of 10 to 15 per cent growth. You're seeing the same thing flow to A2 Milk as well, the potential impact of regulatory changes. The whole sector's pulling out in sympathy from the comments those companies are making."

A2 Milk Co dropped 4.4 per cent to $6.53, while Auckland International Airport fell 5.2 per cent to $6.53 and Scales Corp dropped 4 per cent to $2.92.

SkyCity Entertainment Group shed 2.8 per cent to $3.79. The shares began falling last week in response to the arrest of 18 staff employed by its Australian rival, Crown Resorts, by the Chinese government.

Restaurant Brands is in a trading halt at $5.46 pending the result of an institutional bookbuild. On Wednesday it announced plans to buy Pacific Island Restaurants, the largest fast food operator in Hawaii with 82 Taco Bell and Pizza Hut stores, to diversify its earnings away from New Zealand where it runs the KFC, Pizza Hut, Starbucks Coffee and Carl's Jr food chains.

Spark New Zealand dropped 1.3 per cent to $3.545. Senior executive Jolie Hodson has sold almost all of her ordinary shares in the country's biggest telecommunications business, details filed with the NZX show.

Air New Zealand was the best performer on the index, up 0.8 per cent to $1.925, while Stride Property gained 0.5 per cent to $1.89.

Outside the benchmark index, Pumpkin Patch remains in its trading halt at 6 cents. The children's clothing retailer has been tipped into receivership by its lenders and appointed voluntary administrators after failing to reinvent itself in the face of shrinking sales and too much debt.

"They've had problems for a while, they needed to get sales going to pay the bank and they haven't been able to do that in a satisfactory manner," Stent said. "It would've been impossible for them to raise equity."

Skellerup Holdings gained 1.4 per cent to $1.43. The industrial rubber goods maker expects annual profit to rise as much as 7 per cent, recovering from last year's decline, as it puts greater emphasis on potable water applications and food safety.

- BusinessDesk

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2017, NZME. Publishing Limited

Assembled by: (static) on production bpcf05 at 23 May 2017 23:17:25 Processing Time: 358ms