NZ King Salmon, Chorus adapt

AUCKLAND: Telecommunications network operator Chorus and fish farmer New Zealand King Salmon are sticking to their earnings forecasts, despite the national lockdown.

Both companies are deemed essential services and have adapted to the new environment. Chorus is postponing $50 million of capital spending and King Salmon is beefing up safety measures at its sites and is making sure those people who can work from home are.

Chorus affirmed its recently upgraded guidance for earnings before interest, tax, depreciation and amortisation to be between $640 million and $650 million in the 12 months ending June 30.

However, it expected a smaller annual capital spend of $610 million to $650 million as it suspends nonessential work through the lockdown, such as communal rollouts of the ultrafast broadband network, subdivision builds, proactive pole replacements, and doortodoor fibre campaigns.

``We are continuing to connect premises to copper and fibre where the customer has no existing fixedline broadband service, or they have essential business or educational requirements not met by an existing broadband service,'' it said.

Chorus will also delay the annual inflation increase for wholesale fibre products until October at the earliest.

King Salmon affirmed its forecast for operating ebitda of $25 million to $28.5 million in the year ending June 30, noting the Covid19 situation was ``dynamic''.

``New Zealand consumers need a consistent supply of healthy protein and we are wellplaced as a local, vertically integrated producer to do that,'' King Salmon said in a statement.

Chorus shares fell 37c to $6.55 but are up about 13% so far this year, one of the few stocks to remain in favour with investors.

King Salmon shares rose 11c to $1.63 on Friday but its shares have dropped 22% this year.

The wider market initially followed Wall Street higher, with the S&P/NZX 50 Index up 3.6% at 9975.16 by midmorning. But it closed at 9556.73, down 75.74 points on Thursday’s close.

Unsurprisingly, the gloomy sentiment has weighed on households, too. The ANZRoy Morgan consumer confidence index dropped 16 points to 106 in March, although the survey came before a national lockdown was imposed to counter Covid19.

ANZ New Zealand chief economist Sharon Zollner said times had changed quickly.

``Consumers usually only feel the impact of global shocks with a long lag, but this one has come rushing to their door at bewildering speed,'' she said.

Kathmandu Holdings said it was taking immediate action to cut costs as it shuts stores around the world. That was being eased by government subsidies to supplement wages and the company said it had already applied for wage subsidies in New Zealand.

It pushed out its expected firsthalf earnings announcement to April 3.

Kathmandu's board has suspended its dividend and is reviewing the group's outlook and capital structure.

The shares were unchanged at 86 cents.