“The turn is hardly surprising. July is typically a good month for global sharemarkets, and August and September two of the worst,” he said.
“Inflation is still stubbornly high, we’ve got the potential for another interest rate hike; there’s worrying signs coming out of China with their economy in a difficult spot, and the dairy prices have continued to fall.”
Lister said the latest milk price forecast is back to the level of five years ago and in that time on-farm costs have risen dramatically.
“We will see a lot of farmers unprofitable [because of the latest forecast] and we can’t underestimate how much whack is taken out of the economy.”
Fonterra Co-operative reduced its 2023-24 farmgate milk price forecast to a mid-point of $6.75 per kg milk solids, after dropping it to $7kg/MS on August 4. Fonterra said the Global Dairy Trade index has fallen 16 per cent since its opening farmgate forecast for the season in May.
Rural services company PGG Wrightson fell as low as $3.88 before recovering to $4, down 4c, and Synlait Milk finally picked up 1c to $1.49 after hitting $1.45. Fonterra Shareholders’ Fund decreased 55c or 14.29 per cent to $3.30, but that was more to do with the co-operative’s $800m capital return at 50c a share.
Livestock Improvement Corporation (LIC), unchanged at $1, downgraded its full-year underlying earnings guidance to $17m-$22m, from $22m-$28m.
LIC said although it is early in the season, the lower forecast milk payout has created a challenging economic landscape for many dairy farmers. LIC remained committed to ensuring farmers can continue their investment in breeding the most efficient cows for their herds.
Telco Spark gained 3c to $5.08 after reporting a 20.7 per cent increase in revenue to $4.49 billion and 176.8 per cent rise in net profit to $1.135b for the year ending June. Spark is paying a final dividend of 13.5c a share on October 6.
Earnings were boosted by the sale of 70 per cent of Spark’s TowerCo business, with 1263 cell sites, to the Ontario Teachers’ Pension Plan Board for $900m. That sale and the exit of Spark Sport resulted in a net operating earnings (ebitdai) gain of $529m. Adjusting for the one-off benefit, revenue increased 5.1 per cent to $3.908b and was underpinned by 9 per cent growth in mobile services.
Spark’s guidance for the 2024 financial year was operating earnings $1.215b-$1.26b; capital expenditure $510m-$530m; and total dividend 27.5c a share.
Lister said Spark’s result was in line with guidance, though at the bottom of its range: “It’s steady as she goes for Spark – with the mobile division performing well. Its guidance for the 2024 financial year was a little higher than expected and Spark is a safe, defensive income stock and telecommunications companies should be.”
Ebos Group slipped a further 80c or 2.26 per cent to $34.59 – back to the level of mid-November 2021. Mainfreight was down 51c to an 11-month low of $66.29 after sitting at $66 on October 20.
Fisher & Paykel Healthcare declined 27c to $22.38; SkyCity was down 6c or 2.58 per cent to $2.27; Stride Property decreased 4c or 2.72 per cent to $1.43; Vista Group shed 5c or 2.63 per cent to $1.85; and Vital fell 2.5c or 10.87 per cent to 20.5c.
In the energy sector, Contact was down 11c to $8.38; Genesis shed 5c or 1.98 per cent to $2.47; and Meridian gave up 7.5c to $5.385.
Mānuka honey producer Comvita, down 5c to $3.30, told the market it has achieved the internationally-recognised B Corp Certification for sustainable business practices.
KMD Brands declined 2c or 2.27 per cent to 86c; Michael Hill was down 2c or 2.04 per cent to 96c; Allied Farmers fell 4c or 5.56 per cent to 68c; Bremworth decreased 2c or 4.44 per cent to 43c; and Argosy Property was down 2.5c or 2.09 per cent to $1.17.
Among the few gainers, Seeka rose 20c or 8.33 per cent to $2.60; Winton Land increased 13c or 5.37 per cent to $2.55; and Precinct Properties added 2.5c or 1.99 per cent to $1.28.
