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New Zealand shares fell, dragged lower by Fletcher Building hitting a six-week low, as the company's board advised a second large earnings downgrade this year and the departure of its chief executive, Mark Adamson.
The S&P/NZX50 Index dropped 60.31 points, or 0.8 per cent, to 7,672.44. Within the index, 29 stocks fell, 11 rose and 10 were unchanged. Turnover was $185.3 million.
Fletcher Building dropped 6.2 per cent to $7.59, though it traded as low as $7.38 shortly after the market opened to the news about Adamson, who will leave with immediate effect with the loss of share options and other incentives as the company slashed full-year earnings guidance and flagged an impairment against Australian assets.
Fletcher said operating earnings in the year ended June 30 were about $525m, down from $682m in 2016 and below the $610m-to-$650m range the company gave in March, itself a 15 per cent downgrade against earlier guidance because of problems with two major construction projects. Today it said losses at those projects, which it hasn't identified, would be larger than expected and also announced a $220m impairment against its Iplex Australia and Tradelink business units.
"It's had a pretty whippy day, decent range - open at around $7.40, up to $7.75 and back to where we are," said David Price, broker at Forsyth Barr. "It opened weak, and when we had the conference call at 11(am), people took comfort that there were no real cockroaches in the 2018 numbers."
The company is being investigated by the stockmarket regulator over trading ahead of today's announcement and the March downgrade.
SkyCity dropped 0.7 per cent to $4.23. The completion of its $470m convention centre, widely understood to be one of the two major projects which are blowing out Fletcher's budget, has been delayed to the middle of 2019 from February 2019.
Z Energy declined 2.6 per cent to $7.82, Metlifecare fell 2.5 per cent to $5.50 and Air New Zealand dropped 1.6 per cent to $3.415.
The dual-listed banks led the index's gainers again, with ANZ gaining 2.7 per cent to $32.56 and Westpac up 2.6 per cent to $35.31. The Australian Prudential Regulation Authority (APRA) yesterday released its new "capital adequacy" targets and will require a 150-basis-point increase in the minimum safety reserves that must be held by the big four banks there.
"There was quite a divergence of opinion in Australia as to the amount of capital that would need to be raised, there were some quite extreme numbers and they'd managed to scare the horses, there had been some reasonably heavy selling a couple of days ago ahead of the release," Price said. "So yesterday was a relief rally, and that's continued today, as the numbers are on the face of it very manageable. There were people running around saying they were going to need to have decent sized capital raisings, but that's not going to happen."
CBL Corp rose 2.3 per cent to $3.60 and Port of Tauranga gained 1.8 per cent to $4.62.