Market commentary
WELLINGTON: New Zealand shares dropped as investors picked a weaker outlook for Air New Zealand and Ebos. Fisher & Paykel Healthcare Corp and Auckland International Airport gained on expectations for continuing strong earnings growth.
The S&P/NZX 50 Index fell 22.47 points, or 0.2%, to 9139.87. Within the index, 26 stocks fell, 20 rose and four were unchanged. Turnover was $115.4 million.
Leading the index lower was Air New Zealand, down 4.3% to $3.265. It lifted fullyear pretax earnings 2.5% to $540 million despite higher fuel prices, but the airline is slightly more downbeat about the current financial year.
‘‘After having been very strong for the last few days, and perhaps surprisingly strong given the known fuel cost and currency headwinds they’ll face going into next year, it’s a bit of reality,’’ Matt Goodson, managing director at Salt Funds Management, said.
The duallisted banks dropped as the Australian benchmark index weakened amid political turmoil in Canberra. Westpac Banking Corp was down 2.8% to $31.08 and Australia and New Zealand Banking Group fell 2.4% to $31.25. Australia’s benchmark ASX200 index closed down 21.6 points, or 0.34%, to 6244.4 points.
Comvita fell 2.1% to $5.62 and Spark New Zealand dropped 1.9% to $3.875.
Ebos dipped 0.05% to $20.99. It boosted annual earnings in line with its forecast even though revenue fell, as the pharmaceutical and animal health products company increased margins and benefited from acquisitions. Underlying earnings before interest, tax, depreciation and amortisation on a constant currency basis increased 10.3% to $272.4 million in the year ended June 30, in line with its forecast for 10% growth.
Fisher & Paykel Healthcare Corp was the best performer, up 3% to $15.69. It raised its fullyear earnings forecast by about $5 million on the back of strong sales growth and the weaker New Zealand dollar. Outside the benchmark index, NZME sank 14.5% to 71c. It will pay a smaller interim dividend than analysts expected as firsthalf earnings almost halved to $5.5 million on declining print revenue. Weak business confidence also dented radio agency advertising.
‘‘It does carry a reasonable historic debt load. In terms of earnings multiples, it looks cheap; in terms of audience metrics it’s doing well; radio was perhaps a little disappointing versus expectations. In a declining market, it’s perhaps a little surprising their choices between dividend and debt repayment,’’ Mr Goodson said.