Market close: Contact leads NZ shares higher as earnings season gets underway

The sharemarket awaits earnings reports and the Reserve Bank's monetary policy statement due out on Wednesday. Photo / NZME

New Zealand's hotly anticipated earnings season kicked off today with electricity and gas supplier Contact Energy, the first company to announce its full-year results to the market.

The electricity company revealed that its annual profit had dipped 2.6 per cent in the 12 months ended June 30 compared to the previous period and it also announced it would invest $300 million in a new 51.4 megawatt (MW) geothermal power station at Te Huka near Taupō, due online from late 2024.

This follows the supplier's plan for a geothermal power station at nearby Tauhara. Contact has signed long-term power purchase agreements for the Tauhara power station, including a 15-year contract to supply Genesis Energy with up to 62.5MW – 37 per cent of the new station's total output.

Contact's shares were up 2.1 per cent to $7.87 when the market opened this morning and ended the day 1.4 per cent higher at $7.82 – with $8.1m worth of shares traded.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said Contact's earnings were a "reasonable result" – but the real news was around the $300m investment into the new geothermal power station.

The S&P/NZX 50 index rose 29.4 points, or 0.5 per cent, to 11,789.03. Turnover on the main board was an incredibly light $64.2m.

Mercury Energy's earnings are due out tomorrow and McIntyre said the results would be interesting as the energy company had enjoyed a "strong run-up" to earnings seasons and the market was expecting good numbers from it.

Mercury climbed 0.6 per cent to $6.54 by the end of the day.

Other gainers of the day were top stock Fisher & Paykel Healthcare, which rose 2.5 per cent to $21.37 and Air NZ, which edged up 3 per cent to 69 cents by the close.

Carpet manufacturer Bremworth also had a good day on the index and was up 7.6 per cent to 57 cents.

On the other side of the coin, My Food Bag had another tough day, telling the NZX that inflation and a slowing economy have caused customers to downgrade to its cheaper meal-kit options, which has lowered the meal-kit company's earnings over the past four months.

It expected annual earnings to be lower than the year before, despite managing cost pressures with price increases and ingredient substitution.

McIntyre said My Food Bag's warning to investors "wasn't unexpected" considering the inflationary environment the company was working around.

"This has maybe sent a signal to some parts of the market as well around consumer discretionary [spending]," he said.

My Food Bag shares finished the day down 8 per cent at 74 cents.

Other decliners of the day were real-estate investment company Property For Industry and telecommunications firm Spark.

Spark fell 1.1 per cent to $5.08 and Property For Industry declined 1.1 per cent to $1.73.

Property for Industry announced it had appointed Carolyn Steele to its board as a non-executive director effective from Aug 22.

Metal supplier Vulcan Steel was also down 1.2 per cent to $9.40 today after it told the market today that 42.6m shares will come out of escrow on Aug 24.

The 42.6m shares, which amount to 32.4 per cent of the company, were owned by non-executive shareholders before the company's A$371.6 million float last year.

Other stocks that dragged down the index today were pharmaceutical wholesaler Ebos Group, which was down 1.2 per cent to $38.53 and aged-care provider Ryman Healthcare, which fell 0.2 per cent to $9.40.

On the currency front, the NZ dollar was sitting at 64.45 US cents by the end of the day, up from 64.29 US cents on Friday.