The New Zealand sharemarket is proving to be very resilient. News such as Fletcher Building reporting a near $200 million loss failed to shake the market in this uncertain Covid world.
Fletcher's price edged ahead 1c to $3.50 on big turnover of $16.64m worth of its shares. The S&P/NZX 50 Index slipped 38.12 points or 0.33 per cent to 11,645.32. There were 80 gainers and 49 decliners over the whole market, which saw 60.4m shares worth $217.99m change hands.
Fletcher, a traditional bellwether stock, prepared the market by providing a snippet of its 2020 full-year result, to be announced on August 19. Its net earnings loss, subject to final audit sign-off, is expected to hit $196m because of the Covid-19 impact including lost revenue during the lockdown, lower productivity and one-off restructuring costs.
Despite that, Fletcher's operating cash flows are expected to increase to $410m, and it will be delivering a permanent reduction in costs from the 2021 financial year of $300m. Fletcher is planning to reduce its workforce by about 1500 positions.
Rickey Ward, head of investment strategy group at JBWere, said there were lots of numbers associated with restructuring, redundancy and provisions for completing residual construction contracts – most people hoped Fletcher wouldn't require any provisions – and maybe that's why they felt obliged to come to the market.
"Investors are now battling it out over whether Fletcher is good or bad news," he said.
"Most people will muddle their way through the reporting season over the next two to three weeks, both here and in Australia."
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Maybe the market is overlooking the bad news in favour of slivers of hope. For instance, Fletcher chief executive Ross Taylor said: "The company remains in a strong position to continue driving its strategy and performance improvement." Or the market continues to be buoyed by solid performances offshore in United States and Australia.
The a2 Milk Company fell 15c to $20.58 on the day it announced its new managing director and chief executive, David Bortolussi who starts his new role early next year. Bortolussi, who is presently group president international innerwear at HanesBrands, starts on a salary of $1.9m.
After its stellar run, Fisher and Paykel Healthcare came off 76c or 2.14 per cent to $34.80 on heavy share trading worth $50.95m – just under a quarter of the total market trading - as investors took some profit.
The day's biggest gainer was Augusta Capital, increasing 13c or 13.4 per cent to $1.10 after telling the market that its new owner Centuria Holdings New Zealand had acquired a further 15.14m shares and taken its shareholding to 94.8 per cent.
Other movers were Cavalier, up 3c or 10 per cent to 33c; Metro Performance Glass also up 10 per cent or 2c to 22c; and Cannasouth, increasing 5c or 9.09 per cent to 60c.
The S&P/ASX 200 was trading late in the afternoon at 6135.2 points, up 0.41 per cent. Sydney Airport, which reported a loss of A$53m ($57.4m) for the six months ending June 30, announced a $2 billion capital raising, and Ward said "a lot of Kiwis will be looking at this. Auckland Airport was well supported (with its raising) and Sydney Airport is also a quality investment which struck problems that were no fault of their own."