Shares hold price as reporting kicks off

Contact Energy meets forecast but Fonterra fund falls

New Zealand shares barely budged in relatively light trading as Contact Energy met earnings expectations in kicking off the reporting season. Fonterra Shareholders’ Fund units sank as the dairy giant dashed hopes for a dividend this year.

The S&P/NZX 50 Index fell 0.47 of a point, or 0.004 per cent, to 10,872.74. Within the index, 25 stocks rose, 18 fell and seven were unchanged. Turnover

was $92.2 million, with five companies trading on volumes of more than a million shares.

Contact fell 0.5 per cent to $8.26 on a volume of 1.3 million shares after reporting a 12 per cent rise in operating earnings and met expectations with a final dividend of 23c a share.

“It was a reasonable result and in line with what the market was expecting as well,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “There was a bit of talk about margin pressure with regards to the retail side of business, but every gen-tailer is finding that.”

Fonterra Shareholders’ Fund units led the market lower, down 5.1 per cent at $3.57 on a volume of 411,000, more than twice its 90-day average of 175,000. Fonterra Cooperative Group said it will report an annual loss of up to $675m after booking more than $800m on assets worldwide, including its New Zealand consumer business.

The dairy exporter’s board decided not to pay a dividend for the financial year, subordinating the interests of unitholders to protect farmgate returns for farmershareholders. The co-operative’s farmer-owned shares were also down 5.1 per cent at $3.57, valuing the company at $5.75 billion.

McIntyre said he wouldn’t be surprised if the price tests the $3 level, with most institutional and retail investors having already quit the stock. “It just hasn’t worked,” he said.

Several stocks trading near yearhighs gave up some of those gains, including Kiwi Property Group, down 1.5 per cent at $1.635 on a volume of 1.2 million shares. Argosy Property fell 1.4 per cent to $1.44, Stride Property slipped 1.3 per cent to $2.30 and Infratil decreased 1.1 per cent to $4.875.

Summerset Group was the most traded stock on a volume of 2.1 million shares, more than four times its 481,000 average. It was unchanged at $5.84 ahead of tomorrow’s first-half result. Of other companies reporting tomorrow, NZX increased 0.8 per cent to $1.20 and PGG Wrightson remained in a trading halt pending a 1-for-10 share consolidation.

Spark New Zealand decreased 0.7 per cent to $4.10 with 1.4 million shares changing hands, less than half its 3.1 million average. Meridian Energy was unchanged at $5 on a volume of 1.3 million. Gentrack Group rose 4.4 per cent to $5.50 on a volume of 287,000 shares, more than twice its 90-day average of 113,000.

Tourism Holdings rose 1.3 per cent to $3.96 on a volume of 74,000, less than half its average, after saying a tax benefit in the United States meant it comfortably beat the top end of earnings guidance. Even without that tailwind, it said earnings would be at the top end, or slightly above, its twice downgraded forecasts.