Spark leads 1% index decline
Ebos best gainer, Sky TV dips
New Zealand shares dropped, led by Spark New Zealand, as company earnings show the telecommunications sector is experiencing stiff competition, while Sky Network Television fell as its merger continues to attract opposition. A2 Milk Co and Fletcher also declined.
The S&P/NZX50 index fell 80.05 points, or 1.1 per cent, to 7099.98. Within the index, 22 stocks dropped, 17 rose and 11 were unchanged. Turnover was $134.4 million.
Spark was the worst performer, down 4 per cent to $3.56. The country’s biggest telecommunications company lifted first-half earnings 3.5 per cent to $178 million as the acquisition of Computer Concepts bolstered revenue from its IT services unit, it got an early dividend from its stake in the Southern Cross trans-Pacific cable and it affirmed its annual earnings outlook.
“It probably, as a headline number, looked to be in line with expectations,” said James Lindsay, senior portfolio manager at Nikko Asset Management. “The Southern Cross dividend was a bit higher than people’s expectations. The manager suggested that shifted about $9 million from the second half into the first half, and it lost a bit of share of the mobile market and broadband as well, which probably surprised the market a bit. And it upped its capex. A combination of that has led to a mild disappointment in the result.
“Overlaying t hat, Telstra announced its result, which was poor, and has driven both stocks down.” Dual-listed Australian telco Telstra fell 4.7 per cent to $5.25 on the NZX.
Sky TV dropped 2 per cent to $4.50. Sky says it won’t delay a merger with Vodafone New Zealand to give other telecommunications companies, including Spark, time to appeal it in court if the transaction is approved by the Commerce Commission. Simon Moutter, Spark chief executive, told an analyst briefing he is considering options after that rejection.
“It was an odd request that Spark has made to Sky, and it may suggest it’s going towards a decision that may reflect the merger going ahead,” Lindsay said.
A2 Milk dropped 3.9 per cent to $2.46, Fletcher Building fell 2.7 per cent to $10.11 and Meridian Energy declined 2.2 per cent to $2.64.
Precinct Properties dipped 0.4 per cent to $1.23. It lifted first-half profit 12 per cent to $39.1 million as its overall occupancy rate rose to 99 per cent and demand for its Commercial Bay development stayed strong.
Ebos Group was the best performer, up 2.2 per cent to $18.44. Air New Zealand rose 1.9 per cent to $2.135 and Mainfreight advanced 1 per cent to $21.50.
Units in the Fonterra Shareholders’ Fund gained 0.3 per cent to $ 6.22. The Auckland- based cooperative said in its latest Global Dairy update to the NZX that it sees a smaller decline in local milk production after better-than-expected collections followed unfavourable weather during peak milking months.
Outside the benchmark index, Skellerup Holdings sank 6.2 per cent to $1.51. First-half profit fell 7.5 per cent to $8.9 million due to weaker sales to the mining sector in Australia and higher finance costs for a new factory in Christchurch.
Abano Healthcare was unchanged at $8.70. Healthcare Partners Holdings will consider mounting a full takeover bid for Abano provided it can get access to the medical investor’s books, and has raised its bid for a controlling stake to $10.16 per share from $10.