Market close: NZ sharemarket plunges to biggest single-day fall since June

The S&P/NZX 50 Index was particularly weak in the afternoon and closed at 11,930.55, down 248.61 points or 2.05 per cent. Photo / NZME

The New Zealand sharemarket suffered its biggest single-day fall in eight months after taking a dim view of mixed company results, with a2 Milk plunging more than 7 per cent.

The S&P/NZX 50 Index was particularly weak in the afternoon and closed at 11,896.05, down 248.61 points or 2.05 per cent. It didn’t quite match the 2.59 per cent plunge on June 14 last year.

There were 98 decliners and 35 gainers over the whole market, with 34.23 million shares worth $122.05 million changing hands.

The market was in a punishing mood on companies missing analysts’ expectations on any part of their latest financial results.

Global marketer a2 Milk fell 57c or 7.35 per cent to $7.18 despite reporting a solid half-year result, saying it was in line with its own expectations of double-digit revenue and earnings growth. Its manufacturer Synlait Milk was down 9c or 2.52 per cent to $3.48.

A2 Milk’s profit increased 23.7 per cent to $73.77m on revenue of $783.34m, up 18.6 per cent. Operating earnings (ebitda) were up 10.5 per cent to $107.8m with a sales margin of 13.8 per cent. Infant milk formula sales grew 18 per cent in the Chinese market which was down 12.5 per cent overall.

But a2 Milk “slightly refined” its outlook, saying it expects low double-digit revenue growth for the remainder of the financial year despite challenges in the China market and ebita margin similar to the previous year.

Matt Goodson, managing director of Salt Funds Management, said “a2′s result was there or thereabouts but its margin going forward was lighter than people had hoped. Its share price had an extremely strong run leading up the result and was not priced for any disappointments”.

He said the market was not taking kindly to any financial results that miss a beat. “The market is under pressure from Ryman Healthcare’s fundraising and it was quite weak today.”

Ryman Healthcare was down 28c or 4.64 per cent to $5.75 after completing the first part of its $902m capital raise, with the institutional offer attracting $542m. Institutional shareholders took up 95 per cent of their entitlements and the shortfall was cleared at $6 a share, a 20 per cent premium over the offer price of $5.

Summerset Group, declining 23c or 2.42 per cent to $9.27, is planning a $125m six-year bond issue, with the option of accepting a further $50m of over-subscriptions. Fellow retirement village operators Arvida Group decreased 3c or 2.86 per cent to $1.02; and Oceania Healthcare was down 2c or 2.41 per cent to 81c.

Chorus declined 20c or 2.39 per cent to $8.17 after reporting a 79 per cent fall in net profit to $9m on revenue of $487m, up 1 per cent, for the six months ending December. It is paying an interim dividend of 17c a share on April 11. Chorus increased its full-year operating earnings (ebitda) guidance to $675m-$690m, up from $655m-675m.

Fibre connections increased 38,000 to 997,000 and the fibre uptake is now 71 per cent. Chorus said a workforce gap of about 380 technicians had limited the number of fibre installations it could complete in the period.

Freightways was down 34c or 3.49 per cent $9.41 after reporting a 3.5 per cent increase in net profit of $45.18m on revenue of $552.08m, up 24.9 per cent, for the six months ending December. It had operating earnings (ebitda) growth of 8 per cent and is paying an interim dividend of 25c a share on April 3.

Freightways said while the economic climate will be tougher in the near term, “we remain positive about the resilience of our business model, given its diversification across a number of segments and geographies”.

Scales Corp recovered 11c or 3.45 per cent to $3.22 after telling the market that four of its 15 Mr Apple’s orchards in Hawke’s Bay had been damaged by Cyclone Gabrielle and there was no crop insurance for this event. Scales has withdrawn its full-year guidance.

Serko fell 22c or 8.15 per cent to $2.48 and Vista Group declined 11c or 7.53 per cent to $1.35 after the announcement that both stocks will be removed from the FTSE Russell Index. Channel Infrastructure failed to be included and decreased 1c to $1.46.

Market leader Fisher and Paykel Healthcare shed 40c to $26.20; Mainfreight fell $3 or 3.92 per cent to $73.50 Spark decreased 11c or 2.06 per cent to $5.23; Tourism Holdings was down 19c or 4.63 per cent to $3.91; and SkyCity declined 6c or 2.31 per cent to $2.53.

In the energy sector, Mercury fell 28.5c or 4.4 per cent to $6.19; Meridian was down 13.5c or 2.47 per cent to $5.34; and Vector declined 15c or 3.61 per cent to $4.

Retailers Hallenstein Glasson was up 12c or 2.11 per cent to $5.82; and KMD Brands declined 4c or 3.45 per cent to $1.12.

Other decliners were Skellerup Holdings decreasing 20c or 3.83 per cent to $5.02; Gentrack shedding 11c or 3.81per cent to $2.78; NZX down 5c or 3.94 per cent to $1.22; and Winton Land giving up 8c or 4.04 per cent to $1.90.