NZ stocks: Market drifts lower amid swag of corporate news

12.10pm

The sharemarket moved lower today as it digested a swag of news from Telecom, Contact Energy, The Warehouse and Briscoe Group.

At 11.30am, the benchmark NZSX-50 index was down 12.48 points at 2597.66, while the NZSX-All capital index was down 3.70 points at 882.65.

Among the 109 stocks traded were 25 rises and 35 falls, the market turning over $48.4 million worth of shares.

Shares in market leader Telecom led the way, shedding 9c to 555 on turnover of $20.7 million.

Telecom today issued a March quarter net profit of $232 million, from $197 million last year, boosted by a one-off gain from the sale of its share of an AOL business in Australia.

The company lifted its dividend from 5c a share to 7.5c.

ABN Amro Craigs broker Matt Willis said Telecom's result was good, but at the lower end of expectations.

"I think we're seeing a continuation of a successful strategy for the company in reducing debt, increasing the dividend, and lowering capital expenditure," Mr Willis told NZPA today.

The telco's share price slump could be linked to offshore portfolio selling, he said.

First NZ Capital's Barry Lindsay said it could be pinned to a downgrade in Telecom's full-year profit, from $850 million to within the $820 million to $830 million band.

Also today, Contact confirmed it would buy OMV New Zealand's share of gas produced from the Pohokura gas field in Taranaki.

Contact, whose shares were up 6c at 583, has agreed to buy an entire tranche of gas for five years from Pohokura's first production date, June 30, 2006.

Mr Willis said certainty of gas supply "is going to be good for a stock like Contact".

Meanwhile, shares in retailer The Warehouse Group slumped after it warned that its full year result was likely to be at the low end of the $60 million to $70 million range.

A slow start to the winter season in the group's New Zealand operations and continued problems with merchandising in The Warehouse Australia underpinned the warning, the company said.

The Warehouse, whose shares were down 11c at 421, also said its third quarter sales had risen 9.5 per cent.

Mr Willis said the market was becoming increasingly cynical about The Warehouse's Australian unit, which was weighing heavily on the share price.

"The Aussie business is valued about minus $400 (crct) million, which is about what it would cost to wind the whole operation up in Australia," he said.

"It's (the Australian unit) effectively priced as if it's a dead duck."

Another retailer, Briscoe Group, said it's unaudited sales for the April quarter were $67.3 million, but same store sales were down 8.9 per cent. Briscoe shares were down 5c at 138.

Other shares on the move included: Austral Pacific up 3c at 305, Cavalier down 3c at 472, Ebos down 5c at 355, Fisher & Paykel Healthcare down 5c at 1265, Hellaby down 3c at 500, NZX down 19c at 910, and TeamTalk down 4c at 220.

- NZPA