Market close: NZX slips on heavyweights' decline

Hallenstein Glasson has weathered the storm.

Market heavyweights Fisher and Paykel Healthcare and a2 Milk displayed their true influence as the S&P/NZX 50 Index shed much of its gains from the previous day.

Both stocks, making up 30 per cent of the market capitalisation, had hefty falls as profit-taking took over. Fisher and Paykel declined 80c to $35.70, and a2 Milk decreased $1.15c or 5.35 per cent to $20.35 despite reporting another year of growth. The combined trading in the market's two biggest stocks was worth $79.3 million.

The index made a late rally, finishing down 97.84 points or 0.83 per cent to 11,751.29 after posting a gain of 1.51 per cent on Tuesday. A total of 63.73 million shares worth $210.51m changed hands, and there were 71 gainers and 73 decliners over the whole market.

David Price, Forsyth Barr's director international equities, said "if you take out the movements in a2 and Fisher and Paykel, then the index is dead square. The two stocks can move both ways and can distort the market."

He said investors are expecting companies to surprise them on the upside with their results. "The market got ahead of itself – a2 Milk produced a quality result, nice and clean, but it was expected and spot on with (analysts) forecast. On the flipside, people expected the worst with Hallenstein Glasson and it wasn't. It has weathered the storm, paying a good dividend and we see a good lift in their share price."

For the year ending June, a2 Milk reported a 34 per cent increase in net profit to $385.8m on revenue of $1.73 billion, up 32.8 per cent, for the year ending June 30. With infant nutrition revenue reaching $1.42b, a2 Milk doubled sales in China to $337.7m and expanded distribution to 19,000 stores. The China label now makes up 24 per cent of a2 Milk's global infant formula business.

Clothing retailer Hallenstein Glassons jumped 72c or 20.99 per cent to $4.15 after reporting a steady trading update. Hallenstein said unaudited sales for the year ending August 1 increased 0.1 per cent to $287.76m and net profit is expected to be in the range of $27.2-$27.8m, down 5.1 per cent on last year.

Online sales grew 80 per cent and Hallenstein is paying a fully-imputed interim dividend of 15c a share on September 4. It presently has 11 stores closed in Victoria and 25 in Auckland.

Fellow retailer Michael Hill International was down 1.5c or 4.23 per cent to 34c after its full-year net profit plunged 80 per cent to A$3.1m ($3.4m) from $16.5m. Michael Hill, whose revenue fell from $569.5m to $492.1m, is not paying a final dividend and has deferred its interim dividend of A1.5c a share. The Covid impact of temporarily closing 290 jewellery stores in New Zealand, Australia and Canada was estimated at $80m.

Fletcher Building confirmed its full-year loss of $196m compared with a $164m net profit last year and its share price slipped 2c to $3.40.

ANZ Bank New Zealand struck an unaudited net profit of $351m for the three months ending June, after the Melbourne-based group reported a $1.44b profit. ANZ is paying a fully-franked interim dividend of A25c a share, and the stock rose 50c to $20.49.

Produce company Seeka rose 25c or 6.79 per cent to $3.93 after its net profit rose nearly 55 per cent to $18.4m on revenue of $178.7m, up 5.2 per cent, for the six months ending June. Seeka is paying a 10c a share dividend on September 4.

Medical cannabis company Cannasouth told the NZ Stock Exchange it was not aware of material information that should be released to the market after its share price rose 32 per cent, from 56cs to 74c, over two days this week. Cannasouth finished the day's trading at 71c, down 5c or 7.58 per cent.