NZ stocks: Telecom slumps after profit result

Offshore investors today brutalised Telecom shares after the firm reported double-digit profit growth in the March quarter, a broker said.

Telecom posted a net profit of $259 million in the March quarter, up 11.6 per cent on a year ago. Revenues for the quarter were up 3.4 per cent to $1.41 billion.

Once abnormals were removed, Telecom's March quarter profit was $231m, up 5 per cent, and at the lower end of analysts' forecast of $231m to $243m.

Telecom's quarterly result contributed to its $650m profit for the nine months to March 31. It will pay a 9.5cps fully imputed dividend on June 10.

Morning trade saw Telecom shares plunge 22c to 579, but recover towards 11.30, when they were down 11c at 590, their lowest since December 20 last year.

Hamilton Hindin Greene broker Grant Williamson said offshore investors had a knee-jerk reaction to Telecom's result.

"I didn't think it (the result) was that bad... overall I'm quite happy with it," he told NZPA today.

"Maybe they concerned with the growth of expenses in comparison to revenue," he said, adding he expected local investors to snap up Telecom shares today and push their price back towards 600c each.

At 11.30am, the benchmark NZSX-50 was down 29.76 points at 2917.20, while the NZSX-All capital index was down 11.13 points at 933.29. Both indices were at six month lows.

Morning turnover was $37.7m, which included $23.2m of Telecom.

Mr Williamson said aside from Telecom, trade on NZX was quiet and then mostly driven by offshore investors.

Top three stock Contact Energy continued its recent downward bent, giving up 6c to 685. Fletcher Building lost 15c to 580, a six month low.

Beleaguered carpet maker Feltex lost another 3c to 69, which is still a long way from the 150c a share it was fetching in late March. Rival firm Cavalier lost 5c to 380.

In the retail sector, Briscoe Group was up 1c at 121, Hellaby was down 5c at 565, PumpkinPatch fell 8c to 239, Smiths City was up 3c at 69, and The Warehouse fell 6c to 337.

Ports of Auckland was up 1c at 791, while rival Port of Tauranga fell 5c to 485.

Australia-based bank Westpac was down 4c at 1990 after yesterday gaining 49c on news its profit was up 8.2 per cent at of A$1.325 ($1.42) billion.

Other stocks on the move included: AMP up 12c at 687, Independent Newspapers Ltd down 10c at 600, Pacific Brands down 12c at 223, Sky City Entertainment down 5c at 425, and Baycorp Advantage down 6c at 285.

- NZPA