Drink-maker Frucor Beverages Group dominated an otherwise sleepy New Zealand sharemarket this
morning after warning its profits would be affected by lower-than-expected sales in Britain.
Frucor - a former sharemarket darling - fell 37c to 186 by mid morning after the company cut its forecast for net profit after tax by 35 percent to $11.4 million from $17.5 million.
It reduced its forecast for earnings before interest, tax, depreciation and amortisation (ebitda) to $30 million, down $8.2 million on the previous forecast of $38.5 million.
Frucor's share listing in June last year was one of the market's few success stories. The shares listed at a 4c premium to their issue price of $1.50 and climbed to a high of $2.34.
The earnings downgrade stems from an anticipated $10 million ebitda loss in the UK where "V" sales are likely to be significantly below the prospectus forecast of a break even result.
ABN Amro's Nigel Scott said today's profit warning was a signal of just how tough the international market was getting.
"It sort of moves over into other areas as to what is happening out there really."
Frucor's earnings woes aside, the rest of the sharemarket had made a very quiet start to the week, Mr Scott said.
"It was fairly quiet for a Monday - there was muted response to offshore markets," he said.
By around 11am, the benchmark NZSE-40 index was up 3.10 points at 2068.71, on turnover worth just $12.6 million.
In the US on Friday stocks climbed as investors looked on the bright side of a dire US jobs report, and bet on more aggressive interest-rate cuts from the Federal Reserve to jump-start the economy.
The technology-laced Nasdaq Composite Index gained 45.48 points, or 2.12 per cent, to end at 2191.68, while the Dow Jones industrial average jumped 154.59 points, or 1.43 percent, to 10,951.24.
In other company news, Cedenco Foods was up 3c at 145 after hinting at record earnings this financial year .
"The strong year-on-year growth that the company has experienced since its restructuring in 1997 is now beginning to pay off handsomely for shareholders," Cedenco chairman Basil Logan said in a statement.
Mr Logan said California-based tomato processor, SK Foods, had now completed the purchase of a majority 55 per cent shareholding in Cedenco. The purchase, from subsidiaries of Singapore-based Brierley Investments and Mangatu Investments was at $1.52 per share cum dividend in a $13 million deal.
Winemaker Montana was up 5c at 420 following a meeting of a Stock Exchange committee into the sale of Montana to brewing giant Lion Nathan.
The committee heard evidence on a compliant by rival bidder Allied Domecq that Lion had bought shares in Montana earlier than the exchange's notice and pause conditions allow.
A result from the meeting is expected to be at least a month away, but Allied has given notice it might start buying shares from today in a range of $4.16 and $4.64 a share while Lion has given notice it might start buying from May 16 at $3.95 to $4.70 per share.
Market leader Telecom rose 3c to 608 after analysts predicted the telco would announce a net profit of around $150 million for the third quarter on Friday. This compares with $205 million in the previous March quarter.
In other movements, Carter Holt Harvey was down 2c at 180 after shedding a 3c dividend, Rubicon was up 1c at 56, Genesis was down 5c at 395, Fletcher Building was up 1c at 228, Forests was up 1c at 34, Ports of Auckland was up 10c at 550, and The Warehouse gained 4c to 569.
- NZPA
Frucor profit warning dominates sleepy sharemarket
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