Market close: Mainfreight surge drives NZ market higher

Mainfreight shares jumped after delivering a better-than-expected half-year financial result.

The New Zealand sharemarket got back on a winning run – driven by a surge of more than 9 per cent from Mainfreight on its better-than-expected half-year financial result.

The S&P/NZX 50 Index fell to an intraday low of 11,113.18 but rebounded strongly in the afternoon to close at 11,197.66, up 46.36 points or 0.42 per cent.

There were 82 gainers and 44 decliners over the whole market of 186 stocks on volumes of 26.76 million share transactions worth $80.97m.

Mainfreight jumped $5.22 or 9.06 per cent to $62.81 after reporting a 21.6 per cent decline in half-year revenue to $2.36 billion and 42.6 per cent fall in net profit to $124.55m. Mainfreight is paying an interim dividend of 85c a share on December 15.

The transport and logistics company said the six months ending September was “one of our toughest” but the business had returned to normalised trading. In the previous corresponding period exceptionally high freight volumes and rate structure overly inflated its trading result.

The Air & Ocean (revenue down 43 per cent to $874.06m) and domestic Transportation divisions declined, while Mainfreight’s operations were most affected in Europe, Asia and United States (where revenue was down 42.3 per cent to US$325m and profit before tax falling 79.7 per cent to US$12.0m).

“We expect our second six months of trading to improve, albeit marginally, and remain confident of our medium to long-term growth prospects,” Mainfreight told the market.

Paul Robertshawe, chief investment officer with Octagon Asset Management, said investors were expecting the worst and Mainfreight’s numbers came in close to brokers’ predictions.

“The September trading in Australia and New Zealand was more encouraging than what we heard from Freightways earlier. Mainfreight is a company with a very long-term track record and it can’t avoid recessions,” Robershawe said.

Uncertainty over the impact of the weight-reducing drug GLP-1 continues to plague Fisher and Paykel Healthcare, which fell 73c or 3.25 per cent to $21.75.

Other blue-chip stocks were stronger. Ebos Group was up 51c to $37.51; Meridian Energy gained 17.5c or 3.53 per cent to $5.13; Contact increased 5c to $8.03; Fletcher Building added 6c to $4.55; and Summerset Group was up 7c to $9.95.

Other gainers were Seeka, improving 7c or 3.21 per cent to $2.25; Smartpay, rising 9c or 7.14 per cent $1.35; Vulcan Steel, increasing 23c or 3.05 per cent to $7.78; Serko, up 8c or 1.87 per cent to $4.36; and Bremworth, adding 2c or 3.85 per cent to 54c.

Vital Healthcare Property Trust, up 3c to $2.03, reported a 4 per cent increase in operating profit to $18.558m for the first quarter.

Heartland Group, down 3c or 1.83 per cent to $1.61, confirmed its full-year net profit guidance of $116m-$122m at its annual meeting. It is presently integrating the Challenger Bank which will operate the group’s Australian business activities.

Heartland expects the full year to be more challenging due to increased competition for deposits and higher interest rates impacting borrower demand and credit quality. Director fees were increased from NZ$1.6m or A$1.4m to NZ$2.4m or A$2.2m, a rise of 33 per cent and 57 per cent respectively.

Briscoe Group declined 9c or 1.99 per cent to $4.44; Eroad fell 5c or 6.76 per cent to 69c; T&G Global shed 5c or 2.69 per cent to $1.81; Arvida Group was down 3c or 2.61 per cent to $1.12; and NZME decreased 4c or 4.44 per cent to 86c.

On the Australian market, New Zealand-bred cloud accounting firm Xero was down A$15.83 or 13.8 per cent to A$98.89 (NZ$107) at 6pm NZ time after reporting a steady half-year result.

Operating revenue increased 21 per cent to A$799.55m; subscribers were up 13 per cent to 3.945 million; operating earnings (ebitda) gained 90 per cent to $206.09m but net profit fell $16.13m to $54.08. Xero is aiming to reduce operating expenses to income to 75 per cent, from the present 79.1 per cent.