Fletcher fall drags down market

Skellerup advanced 2.3 per cent to $1.76, the highest it has traded since July 2014. Photo / Christine Cornege

Skellerup advanced 2.3 per cent to $1.76, the highest it has traded since July 2014. Picture / Christine Cornege New Zealand shares fell, dragged lower by Fletcher Building with weakness from Australia & New Zealand Banking Group after its earnings worried investors.

The S&P/NZX 50 Index dropped 35.93 points, or 0.4 per cent, to 8086.74. Within the index, 27 stocks fell, 13 rose and 10 were unchanged. Turnover was $199 million.

"There's still a bit of uncertainty around the new Government weighing on investors' minds somewhat," Grant Williamson, director at Hamilton Hindin Greene said. "Offshore markets are also weaker, which is flowing through to us."

Fletcher Building was the worst performer again, down 2.7 per cent to $7.46. On Wednesday it announced it has taken a further $125m provision against problematic construction contracts including the convention centre and the justice precinct in Christchurch, and said its B&I unit would report a full-year loss of $160m, including $35m of overhead costs.

"It's back down to support levels around $7.50," Williamson said.

"There have been a number of research notes put out which have had the target price anywhere from under $7 to over $8. There are pretty mixed views about it. It has let the market down a number of times now, and normally the market only allows companies a couple of downgrades. Closing below $7.50 is not a good look, and it could indicate it's going to be in for more downside."

Australia & New Zealand Banking Group fell 2.3 per cent to $33.54. The local unit boosted annual earnings 21 per cent to $1.86 billion in cash profit, while the Australian group's cash earnings rose 18 per cent to A$6.94b, although it didn't include the impact of ANZ selling its wealth businesses to IOOF or the 40 per cent stake it held in Metrobank Card.

"The share price lost ground in Australia. On the surface it looked like a good result but there are concerns going forward," Williamson said. "There are reports about the Sydney apartment scene which the banks have large exposure to, and if Sydney starts to come under ... pressure I wouldn't be surprised if other big cities in Australia did too."

Synlait Milk declined 2.5 per cent to $7.78 and Arvida Group dropped 1.7 per cent to $1.15.

Freightways dipped 0.8 per cent to $7.54. It said sales and profit rose in its first quarter, putting the courier and information management company on track for annual earnings growth.

Net profit was $15.1m excluding certain items in the three months ended September 30 from $14.1m a year earlier, the Auckland-based company said in a statement. Operating revenue rose 7 per cent to $143m.

Comvita was the best performer, up 4 per cent to $8.35.

"[It's still] well under what it was in 2016," Williamson said.

Tourism Holdings gained 2.5 per cent to $4.85, Trade Me Group rose 2 per cent to $4.58 and Air New Zealand gained 1 per cent to $3.39.

Outside the benchmark index, Skellerup advanced 2.3 per cent to $1.76, the highest it has traded since July 2014. On Wednesday the industrial rubber goods maker said first-quarter trading had been strong and it expects improved earnings in 2018.