Market close: Solid financial results unable to lift NZ sharemarket

The NZ sharemarket suffered its third biggest single-day fall this year, wiping out the gains made over the past eight months.

The New Zealand share market wasn’t in a sympathetic mood, falling more than 1 per cent despite four of the leading stocks producing solid financial results.

The S&P/NZX 50 Index was on a slide all day and closed at 11,458.69, down 152.5 points or 1.31 per cent, the third biggest single-day fall this year. The index is at its lowest level this year and the gain over the past eight months has been wiped out.

There were 42 gainers and 80 decliners over the whole market on volumes of 42.62 million share transactions worth $117.39 million.

Greg Smith, head of retail with Devon Funds Management, said there is an underlying nervousness about the local market.

“The company results, even if they are solid, are coming out in an environment where there is anxiety around the Chinese economy and concern about rising bond yields. This has manifested into skittish markets, here and overseas.”

Global marketer a2 Milk plunged 67c or 12.52 per cent to $4.68, Chorus declined 24c or 2.86 per cent to $8.15, and Mercury Energy was down 24c or 3.64 per cent to $6.35 even though their earnings were in line with market expectations – and in a2 Milk’s case slightly above.

Freightways, talking growth in Australia, fared better by gaining 1c to $8.29.

For the year ending June, a2 Milk’s revenue increased 10 per cent to $1.59 billion, operating earnings (ebitda) were up 11.8 per cent to $219.3m, and net profit rose 26.9 per cent to $155.64m.

Infant milk formula sales were more than $1.1b, with a 27.8 per cent gain in China label sales surpassing the English label for the first time. The infant milk formula market has declined 14 per cent, making a2 Milk a top-three gainer.

Smith said there was disappointment over a2 Milk’s forecast of low single-digit growth and the fact it wasn’t paying a dividend or making a share buy-back despite having $800m in cash.

“They are still bullish about the opportunity in China and gaining market share, but the market is declining,” Smith said. “A2 is at the coalface of the Chinese economy and there are some cracks appearing. This reinforces the amount of uncertainty around China.”

Chorus, intent on becoming an all-fibre digital infrastructure company, reported steady revenue of $980m and a 60.9 per cent fall in net profit to $25m for the year ending June.

Operating earnings (ebitda) were $682m, up $22m, and guidance for the 2024 financial year is $680m-$700m. Chorus is paying a final dividend of 25.5c a share on October 10.

Mercury had a 24.8 per cent increase in annual revenue to $2.73 billion and a 78 per cent fall in net profit to $103m, though last year’s included the gain made on the sale of its Tilt Renewables shareholding.

Operating earnings (ebitdaf) increased $260m to $841m and 2024 financial year guidance is $835m. Mercury is paying a final dividend of 13.1c a share on September 29. Mercury’s annual generation increased 21 per cent (wind was up 16 per cent) because of record hydro inflows.

Freightways reported a 28.5 per cent increase in revenue to $1.12 billion and net profit of $75.29m, up 7.3 per cent for the year ending June. Operating earnings (ebitda) were $214.9m, up 14.8 per cent, and Freightways is paying a final dividend of 26c a share on October 2.

Freightways’ earnings included nine months of trading from courier business Allied Express and revenue surged 143 per cent in Australia compared with New Zealand’s 6 per cent.

Freightways is planning a dual listing on the ASX, saying Australia is a larger and growing part of its activity, and it is likely that the pace of growth there will surpass that of New Zealand.

Skellerup Holdings and Spark both announced solid results last week and were down 25c or 5.59 per cent to $4.22, and 6c to $5.02 respectively.

Auckland International Airport was down 13c to $8.12; Contact Energy decreased 16c or 1.91 per cent to $8.22; Ebos Group shed 49c to $34.10; KMD Brands declined 3c or 3.49 per cent to 83c; and Vulcan Steel was down 15c or 1.79 per cent to $8.22.

In the property sector, Argosy shed 4c or 3.42 per cent to $1.13; Precinct declined 2.5c or 1.95 per cent to $1.255; Property for Industry was down 3c to $2.34; and Vital Healthcare Trust declined 4c or 1.7883 per cent to $2.27. However, Goodman Trust was up 4c or 1.78 per cent to $2.21, and Investore rose 5c or 3.79 per cent to $1.37.

SkyCity was down 5c or 2.2 per cent to $2.22; Restaurant Brands declined 21c or 4.4 per cent to $4.56; and Pacific Edge slipped 1.9c or 14.62 per cent to 11.1c.

Among the gainers, Fisher and Paykel Healthcare was up 11c to $22.49; Genesis Energy increased 7.5c or 3.04 per cent to $2.545; AFT Pharmaceuticals added 8c or 2.32 per cent to $3.53; Gentrack collected 10c or 2.34 per cent to $4.38; Carbon Fund improved 4c or 2.26 per cent to $1.81; and Millennium & Copthorne Hotels NZ rose 8c or 4.35 per cent to $1.92.