Synlait Milk, Fletcher weigh on share prices

New Zealand shares fell as Synlait Milk led the market lower for a second day after it slashed its earnings outlook on Thursday.

The S&P/NZX 50 index declined 46.01 points, or 0.4 per cent, to 11,834.83. Within the index, 24 stocks fell, 23 gained and three were unchanged. Turnover was $168.2 million.

Synlait Milk fell 5.6 per cent to $6.42, having been aggressively sold off on Thursday, after it revised first-half net profit down by roughly $10m and lowered its annual outlook to a flat profit at best. In two days the stock has dropped 22.6 per cent.

A2 Milk was unaffected by its key supplier’s poor performance, rising 0.7 per cent to $15.91.

Stuart Williams, head of equities at Nikko Asset Management, said Fletcher Building was also weighing on the index, down 2.8 per cent at $5.23. It has been a topic of conversation since the release of SkyCity Entertainment

Group’s first-half result on Thursday because of its contract to build the international convention centre in Auckland.

SkyCity shares held at $3.67 yesterday. On Thursday, it reported a 7.9 per cent decline in underlying earnings, with the result overshadowed by the insurance claim for last year’s convention centre fire.

Williams said investors were trying to navigate upsides from increased government infrastructure investment against potential remediation work at SkyCity, ahead of Fletcher’s own earnings report next Wednesday.

Travel stocks on the NZX fell yesterday. Air New Zealand was down 2.5 per cent at $2.75 on more than double its 90-day average volume, Auckland International Airport fell 1.3 per cent to $8.35 on three times its average volume, and Tourism Holdings slipped 0.3 per cent to $2.94 on a lighter volume of 80,000 shares.

On Thursday, China reported a sudden jump in the number of people with the covid19 virus, causing equity markets to falter temporarily, before the World Health Organisation clarified that the increase was due to a re-classification of suspected cases.

Z Energy posted the biggest gain on the index, rising 3.8 per cent to $4.60, closely followed by Sky Network Television, rising 3.2 per cent to 65c as it continues its recovery from a record low.

Sharemarket operator NZX rose 1.4 per cent to $1.45 after it reported a full-year net profit of $14.6m, up 7.1 per cent from a year earlier. The stock is up more than 40 per cent in the last 12 months.

Gentrack gained 2.2 per cent to $2.33. The stock has gained 16 per cent since January 31. The software developer’s share price has been under pressure after it downgraded its earnings forecast.