NZ stocks: Energy runs out of steam

All eyes were on Fletcher Energy as it dominated sharemarket trading yesterday, in the wake of a second takeover bid and a healthy half-year result.

Energy shares, which climbed 40c on Tuesday after the Peak Petroleum consortium topped Shell's takeover offer, shed 15c yesterday to close at $9.05 with nearly 14 million shares changing hands.

Buoyed by strong oil and gas prices, Fletcher Energy reported a $308 million half-year profit, up from $174 million a year earlier.

But doubts about Peak's bid put downward pressure on Energy's share price.

Fletcher Challenge chairman Rod Deane said that next Tuesday's shareholder meeting would go ahead as scheduled to vote on the Shell bid.

The Peak consortium, whose members include Sir Ron Brierley's Guinness Peat Group, Greymouth Petroleum and merchant bank FR Partners, had wanted the shareholder meeting postponed to do due diligence checks on Fletcher Energy.

Institutional dealer Dave Tetro, of J P Morgan Chase, said the downward movement in the Fletcher Energy share price could be attributed to some profit-taking as well as market assessments of the new bid.

"The stock ran a little hard on the close on Tuesday night and investors are working out the pros and cons of moves in the stock," he said. "The share price at current levels is perhaps not quite as high as the new bid and the share price reflects the uncertainty at the moment."

The value of Energy shares traded accounted for more than half the market's $206.5 million turnover.

Fletcher Building weakened 20c to $2.01 on the back of its poor result, while Forests picked up 1c to 32c.

Don Turkington, of Cavill White Securities, said that even allowing for one-off items, Building's performance was below market expectations. "That was the major shock," he said.

Dr Turkington said Fletcher Forests' loss of $498 million, after unusual items, was "pretty much anticipated".

Overall, there were 42 rises and 65 falls, with the benchmark NZSE40 capital index losing 16.11 points to 1972.03.

Other leaders to ease included Telecom 7c to $5.15, Carter Holt 2c to $1.75, Air NZ As 4c to $1.38, Fisher and Paykel 15c to $8.60, Baycorp 25c to $11.25, and Tranz Rail 10c to $4.05.

But Lion Nathan gained 5c to $4.80, Auckland Airport was up 4c to $3.52 and The Warehouse added 2c to $5.40.

The New Zealand dollar slipped back to last week's levels in late trading yesterday, hovering just under 43USc at the close.

One forex dealer said the unit was held captive by a strong seller, despite economic data giving it every reason to firm.

"It's unfortunate it's been held hostage to reasonable flow from one local bank which has been a seller," he said, "despite some data that could be viewed as suggesting the Reserve Bank might now be on hold in terms of easing on March 14."

- NZPA