NZ stocks: Fletcher Building tumbles as chief quits

The New Zealand sharemarket continued its downward journey yesterday, amid mixed news for the market leaders.

"It was a typical kiwi market - just when you think the road is smooth you hit potholes," Richard Burton of Cavill White said.

The Reserve Bank's decision to leave the cash rate unchanged was considered neutral for equities.

The NZSE-40 capital index fell 20.48 points, or 1.02 per cent, to 1984.24.

Turnover of 34.05 million, valued at $117.42 million, was largely made up by Telecom and Fletcher Energy.

Telecom, down 25c to $5.50, has emerged as frontrunner in the bidding war for the mobile phone assets of Australian telco Cable and Wireless Optus. Shareholders punished Telecom yesterday ahead of its anticipated need for a large amount of cash to bankroll the acquisition.

The Sydney Morning Herald said comments by the head of Australia's competition watchdog had put Telecom "firmly back in the picture as a serious contender."

With no strategic partner formally identified to help to pay the asking price of up to $A18 billion for Optus' mobile business, recent Australian media reports have questioned Telecom's chances of a successful bid.

However, an analyst told the Sydney Morning Herald: "We know Cable and Wireless wants out and we know that Telecom NZ wants in."

Fletcher Building, down 14c at 214, suffered a major body blow yesterday when chief executive-designate Alexander Toldte quit.

Fletcher Challenge chief executive Michael Andrews has been appointed Building's interim chief executive, but sharemarket reaction was swift and severe.

Elsewhere in the Fletcher stable, Energy was down 3c at $8.80 as its US associate Capstone Turbines fell back, and Forests gained 1c to 33c.

Carter Holt Harvey, down 3c to 159, reported a lower than expected net profit for the December quarter of $42 million, down from $89 million in the same quarter a year ago. Analysts had predicted an average net profit of around $56 million for the quarter. The company blamed a slowdown in Australasian residential construction for the result.

Elsewhere, Tranz Rail gained 15c to 385 and Genesis lifted 35c to 705 on good news about its treatments for psoriasis and asthma. The Warehouse fell 5c to $5.40, and Ports of Auckland shed 15c to $4.25.

Meanwhile, listed dairy farmer Tasman Agriculture could pocket more than $6 million to help it through deregulation of the Australian dairy industry. The company owns 23 dairy farms in northwest Tasmania, and its final share of the Australian Government's $2 billion industry adjustment package is still to be determined.

- NZPA