Shares follow Nuplex downward
NZX50 Index slips 0.2% as resin maker cuts full-year earnings guidance under pressure from competition
New Zealand shares fell as Nuplex Industries dropped to a nine-month low after cutting its full-year earnings guidance. New Zealand Oil & Gas declined after it said costs for its offshore explorations in the Taranaki Basin had climbed to US$40 million from US$27 million.
The NZX 50 Index fell 7.95 points, or 0.2 per cent, to 5179.4. Within the index, 25 shares fell, 18 rose and seven were unchanged. Turnover was $81.6 million. Trading on the NZX was halted for 20 minutes yesterday morning, owing to a system error in the stockmarket operator’s software.
Nuplex declined 4.2 per cent to $3.22 after it cut its full-year earnings guidance for a second time, saying competition across its Australia and New Zealand business has squeezed margins for both resins and specialty chemicals. Earnings before interest, tax, depreciation and amortisation for the 12 months ending June 30 was now expected to be between $121 million and $125 million, compared with guidance issued four months ago for ebitda to fall within the lower end of a range of $130 million to $145 million.
“For long suffering shareholders, who have been waiting for the transformational strategy to turn the business around by cutting costs and so on, it is another disappointment that that process is still ongoing,” said James Smalley, director at Hamilton Hindin Greene.
“One could say investors didn’t really set the bar too high for Nuplex, although it is always disappointing to have a downgrade. The market wasn’t expecting great things from the company anyway.”
NZOG fell 4.3 per cent to 78c after announcing the cost of the US$27 million ($32 million) exploratory Oi well offshore Taranaki has risen to US$40 million, largely as a result of the drilling partners being forced to plug and abandon the first well.
The well is a partnership between operator AWE (31.25 per cent), Pan Pacific Petroleum (50 per cent) and NZOG (18.75 per cent), with costs of the re-drill to be borne by the partners in proportion to their shareholdings in the prospect.
Pacific Edge climbed 7.1 per cent to 91c to be the best performer on the day. The Dunedin-based biotech company has declined 35 per cent year to date as investors mulled whether its high share price would match its potential earnings growth.
“It looks like a couple of large existing investors were liquidating their holdings. Now that selling pressure has eased, the stock is bouncing back up,” Smalley said.
Telecom declined 1.1 per cent to $2.685. Ryman Healthcare slipped 1.2 per cent to $8.37. Fisher & Paykel Healthcare fell 0.9 per cent to $4.67.
Fletcher Building rose 1 per cent to $9.24. Sky Network Television advanced 0.5 per cent to $6.65.
Burger Fuel Worldwide slipped 0.4 per cent to $2.51. The burger chain said full-year sales rose 20 per cent to $14.4 million while profit dropped 63 per cent to $401,000.
Outside the market, Serko said it had closed the retail portion of its share offer nine days early and may scale back public share requests after strong investor demand.
It expects to list on the main board of the NZX on June 24.