New Zealand shares fell as Air New Zealand declined after warning its record profit might not be repeated and investors cashed in recent gains in an earnings season where companies have responded to increasing demand for yield with bigger dividend payments.

Sky Network Television gained after beating earnings expectations.

The S&P/NZX 50 Index declined 35.98, or 0.5 per cent, to 7391.3. Within the index 28 stocks fell, 17 rose and six were unchanged. Turnover was $160 million.

Air New Zealand fell 0.5 per cent to $2.22.


The national carrier reported a record profit and declared a special dividend, though warned cheap fuel and the country's tourism boom was attracting more foreign carriers which would weigh on the company's earnings in 2017.

"That looks to be showing the business is under pressure from a lot of competition around in the market," said James Lindsay, who helps manage $400m of NZ equities at Nikko Asset Management.

A2 Milk Co led the market lower, falling 3.3 per cent to $2.05 after reporting a return to profit earlier this week, while Metlifecare dropped 3 per cent to $6.08 having posted increased earnings and dividends when it reported on Wednesday.

Nikko's Lindsay said the benchmark index had been near record highs with New Zealand's relatively strong economy attracting investors in search of yield.

Sky TV rose 2.8 per cent to $4.82 after the pay-TV operator posted a profit of $147.1m.

Port of Tauranga rose 1.5 per cent to $19.65.

Vital Healthcare Property Trust gained 1.32 per cent to $2.31 and Tegel Group increased 1.2 per cent to $1.76.

Fletcher Building declined 0.9 per cent to $10.49 and Spark New Zealand increased 0.6 per cent to $3.925.

Outside the benchmark index, CBL Corp gained 2.8 per cent to $2.90 after lifting first-half operating earnings on increased gross written premium and affirmed guidance for annual profit of $40.4m.

Vista Group International fell 7.5 per cent to $6.20 after the cinema software developer more than doubled first-half profit

NZME gained 1.2 per cent to 83c after the publisher and radio broadcaster increased first-half earnings 0.5 per cent.

Delegat Group, the winemaker, was unchanged at $6.10.

Seeka Kiwifruit Industries was unchanged at $4.50 after the fruit grower almost doubled first half profit and raised its interim dividend.