Market close: Seeka falls after giving gloomy kiwifruit outlook

Seeka was down 2c to $2.86 after telling the market that kiwifruit volumes were well down on the estimate, reflecting climatic events such as a mild winter followed by a severe late frost, a cyclone and hail.

The New Zealand sharemarket is perfecting the art of the late surge, and the country’s biggest kiwifruit grower Seeka has warned its latest harvest could be down as much as 20 per cent.

After trading flat for most of the day, the S&P/NZX 50 Index rose sharply in the last half-hour matching session and closed at 11,917.82, up 33.72 points or 0.28 per cent – after reaching an intraday low of 11,845.01.

There were 58 gainers and 75 decliners over the whole market and volumes picked up, with 51.09 million shares worth $161.9 million changing hands.

The market is looking ahead to the release of the March quarterly consumer price index (CPI), with annual inflation expected to be near its peak.

Matt Goodson, managing director of Salt Funds Management, said the CPI is very important, especially the mix between tradeable (imported goods) and non-tradeable (domestic), and the numbers could be market-moving.

The Reserve Bank has forecast a 1.8 per cent quarterly gain, compared with 1.4 per cent in the December quarter, 1.7 per cent for tradeable (1.4 per cent) and 1.9 per cent for non-tradeable (1.5 per cent).

The annual inflation rate is expected to remain steady at around 7.2 per cent.

“That is still far too high, with wage demands all over the place,” said Goodson. “Even though inflation is very close to a peak, the rate of decline is insufficient to suggest we will get to 1-3 per cent any day soon.”

He said the market will soon be in its confession session and investors will be able to gauge how companies are tracking for the rest of the year.

“Given the economic backdrop, I think there will be more [guidance] downgrades than upgrades.”

Te Puke-based Seeka, down 2c to $2.86, told the market that kiwifruit volumes were well down on the estimate, reflecting climatic events such as a mild winter followed by a severe late frost, a cyclone and hail.

“Overall, the company estimates that total volumes could be down by 20 per cent on the previous year and may result in a forecast operating loss for the current year,” Seeka said.

It was too early to accurately estimate full-year guidance, and the company has slowed its capital expenditure programme and continued with asset reviews, Seeka said.

The energy sector was weaker, with Contact down 6c to $7.59; Genesis declining 6.5c or 2.35 per cent to $2.705; and Manawa decreasing 9c or 1.81 per cent to $4.87.

Meridian Energy was down 6.5c to $5.175 after reporting a 2.7 per cent decline in retail sales volumes for March, compared with the same month last year. For the March quarter, sales were 1.3 per cent higher, with a 13.1 per cent higher average price.

Meridian has revised its full-year capital expenditure to $370m-$395m - $320m-$340 for growth and $50m-$55m for business spend. National hydro storage in the month to April 13 increased to 119 per cent, from 105 per cent of the historical average. The South Island was 110 per cent of average and the North Island 196 per cent.

Mercury, down 2.5c to $6.16, told the market in its quarterly operating report that national demand reduced 1.1 per cent compared with the previous corresponding period – the lowest third-quarter level since 2009.

Hydro generation increased 43 per cent or 367GWh to 1220GWh, reflecting high inflows, and geothermal generation was down 57GWh to 596GWh, mainly due to unplanned outages at Kawerau and Rotokawa. Mercury increased connections by 11,000 over the quarter.

Fisher and Paykel Healthcare was up 42c to $26.95; Ebos Group increased 35c to $45.14; Mainfreight collected $1.15 to $71.90; Napier Port rebounded 6c or 2.36 per cent to $2.60; Winton Land gained 5c or 2.5 per cent to $2.05; and Bremworth added 1.5c or 4.41 per cent to 35.5c.

Chorus continued its strong run, increasing 7c to an all-time high of $8.77 and surpassing the previous peak of $8.74 achieved on February 16.

Goodson said Chorus continued to undertake an unusually aggressive and unorthodox buy-back programme when its share price has done significantly better than the rest of the market.

“Just this week, Chorus bought back 271,000 shares out of the 492,000 traded – 55 per cent of the volumes. It’s very hard to understand why they are doing this. Normally buy-backs are gradual over 12 months, but this appears to be an emergency.”

Chorus’ $150m buyback, with a maximum of 22.54 million shares, began on February 25.

Vista Group was down 4c or 2.96 per cent to $1.31; Arvida Group declined 3c or 2.83 per cent to $1.03; Green Cross Health shed 4c or 2.99 per cent to $1.30; and NZ Rural Land was down 2c or 2.17 per cent to 90c.

NZX, down 2c to $1.16, provided a full-year operating earnings (Ebitda) of $36m-$40.5m to shareholders at the annual meeting. NZX has $10.3 billion in funds under management, and chairman James Miller said Smartshares will lead the passive (investment) market in New Zealand for years to come.