Market close: Mainfreight tumbles after delivering sombre outlook

The S&P/NZX 50 Index recovered from morning losses to close reasonably flat today at 11,959.85 – down 11.98 points or 0.1 per cent. Photo / NZME

Star performer Mainfreight has consistently grown its earnings and dividends over the last 13 years but it took a tumble on the New Zealand sharemarket on a sombre outlook for the new financial year.

The S&P/NZX 50 Index fell sharply to 11,902.01 in the morning on the back of weak offshore markets, but recovered its losses in the afternoon to close reasonably flat at 11,959.85 – down 11.98 points or 0.1 per cent.

There was an even mix of 63 gainers and 64 decliners over the whole market on volume of 24.68 million share transactions worth $101.89 million.

The Dow Jones Industrial Average fell for the fourth consecutive day, down 0.77 per cent to 32,799.92 points, as negotiations so far have failed to reach a deal on the United States debt ceiling and increasing investors’ worries about a potential default.

The S&P 500 Index declined 0.73 per cent to 4115.24 points, and Nasdaq Composite was down 0.61 per cent to 12,484.16. Across the Tasman, the S&P/ASX 200 Index had fallen 1.07 per cent to 7136.7 points at 6pm NZ time.

The NZ dollar continued to weaken against the American greenback following the Reserve Bank’s expectation that interest rate increases have likely peaked. The NZ dollar was trading at US60.81c after reaching an intra-day high of US61.16c and down from US62.50c the day before.

Global transport and logistics company Mainfreight fell $2.34 or 3.31 per cent to $68.41 after reporting an 8.8 per cent increase in revenue to $5.675 billion and 20 per cent rise in net profit of $426.47m for the 12 months ending March.

It is the 13th year of ever-increasing revenue and profit growth and Mainfreight is paying a final dividend of 87c a share on July 21. This brings the full-year dividend to $1.72, an increase of 21.1 per cent on the previous year.

Mainfreight told the market that second-half trading fell short of expectations due to slowing economic conditions, declining inventory activity and less international supply chain congestion, resulting in a swift reduction in sea and air freight rates.

The company said macroeconomic conditions are expected to deteriorate further, reducing freight volumes across all its logistics products, and it is repricing freight rates because of these inflationary pressures. The operations in the US and Asia were most affected.

Jarden Wealth Management adviser Greg Main said Mainfreight was at the cutting edge of the economic slowdown and post-Covid realignment: “Its Air and Ocean division certainly benefitted from the higher prices during Covid. Mainfreight is now expecting a challenging six to 12 months.”

Fonterra Shareholders’ Fund rose 14c or 4.05 per cent to $3.60 after receiving a trading update from the dairy co-operative that included an increase in full-year forecast earnings to 65-80c a share, up from 55-75c. But farmgate milk price forecasts have been reduced.

The payment for the 2022/23 season is now expected to be $8.20 per kgMS, down from $8.30; and the opening 2023/24 forecast is $8 per kgMS. Fonterra said global dairy trade prices have not recovered to the levels required to hold the previous milk price midpoint for this season.

Fonterra’s net profit for the third quarter was $1.32 billion, up $854m on the same period last year and equivalent to 81c a share, and included the $260m gain on the sale of the Chile Soprole business.

Fletcher Building continued its good run, up 9c or 1.81 per cent to $5.07; Fisher & Paykel increased 31c to $25.65; Ebos Group gained 29c to $43.18; Infratil added 7c to $9.88; and a2 Milk collected 7c to $5.80.

Other gainers were Napier Port increasing 5c or 2.03 per cent to $2.51; Steel & Tube improving 2c or 1.77 per cent to $1.15; Heartland Group rising 5c or 3.18 per cent to $1.62; Investore up 5c or 3.55 per cent to $1.46; and Vista adding 4c or 2.88 per cent to $1.43.

In the energy sector, Meridian was down 13c or 2.36 per cent to $5.37, and Genesis declined 4.5c to $2.725. Mercury shed 3.5c to $6.385 after being fined $279,500 under the Fair Trading Act for misleading 2000 customers between 2017-2020 over an early termination fee.

Contact, down 6c to $7.91, has signed a 10-year supply agreement with Microsoft, which will be taking all the renewable energy from its new 51.4MM Taupō Te Huka unit 3 geothermal power station.

Pacific Edge, down 1c or 2.13 per cent to 46c, reported a 71 per cent rise in operating revenue to $19.6m and a net loss of $27m for the year ending March. Pacific Edge had a 58 per cent increase in net operating expenses to $53.1m as it invested in growth. It has cash of $77.8m.

Total laboratory throughput of Cxbladder tests increased 37 per cent to 31,565, commercial tests rose 39 per cent to 26,691 tests, and United States ordering clinicians grew 46 per cent to 1150.

Eroad fell 7c or 10.94 per cent to 57c; NZME was down 3c or 2.94 per cent to 99c; and Rakon decreased 7c or 6.67 per cent to 98c.