Market close: NZ stocks slip ahead of reporting season

The New Zealand sharemarket slipped more than half a per cent.

The New Zealand sharemarket slipped more than half a per cent despite a rebound on Wall Street, with fast food operator Restaurant Brands continuing to slide.

The S&P/NZX 50 Index held its ground in the morning but then steadily declined to close at 11,868.75, down 65.49 points or 0.55 per cent. The index has risen 3.6 per cent so far this year.

There were 46 gainers and 89 decliners over the whole market, with 32.57 million shares worth $117.55 million changing hands.

Greg Main, Jarden Wealth Management adviser, said investors were taking a cautious stance to the local market heading into the company reporting season, which starts in earnest next week.

“There’s the hangover of the Restaurant Brands downgrade and Fletcher Building’s additional provision for the NZ International Convention Centre. The cyclical stocks are a bit exposed, and it will be interesting to see what the companies say in their outlook (during the reporting season),” Main said.

Contact Energy, Fletcher Building, Spark, PGG Wrightson and Skellerup Holdings all report next week, and Vital Healthcare Property Trust on Thursday.

Main said the New Zealand market was lagging United States sentiment with talk of a soft economic landing. But that means inflation will come back and interest rates will stay higher for longer, keeping the pressure on consumers.

The US July consumer price index, released later this week, is expected to show that annual inflation increased to 3.3 per cent, from 3 per cent the previous month.

The Dow Jones Industrial Average rose 1.16 per cent to 35,473.13 points; S&P 500 was up 0.9 per cent to 4518.44; and Nasdaq Composite increased 0.61 per cent to 13,994.4.

Berkshire Hathaway, run by the legendary investor Warren Buffett, increased 3.41 per cent and reached a new high of US$551,920 (NZ$907,460), having risen 17.55 per cent this year and the highest share price in the world by far.

The second highest-priced stock is Swiss chocolate maker Lindt & Sprüngli AG at 105,600 Swiss francs (NZ$198,972) a share.

At home, Restaurant Brands, which lowered its full-year net profit guidance by 50 per cent, declined a further 40c or 7.14 per cent to $5.20, after falling 12.23 per cent the day before.

Fletcher Building declined 17c or 3.03 per cent to $5.44 after telling the market it is making an additional provision of $105m for the NZ International Convention Centre. The amount is made up of $50m additional cost, $20m lower works insurance and zero third party liability insurance compared with $35m previously.

Fletcher said third party liability insurance could be more than $100m but is not yet virtually certain for accounting requirements in the 2023 financial year. Fletcher confirmed full-year operating earnings (ebit) guidance of $800m and margins greater than 9 per cent.

Main said operationally Fletcher’s business is going well and even if they did get back some insurance, it’s still another provision for the convention centre. It came when (competitor) James Hardie Industries announced a good result in Australia.

James Hardie was up 14.12 per cent to A$46.51 (NZ$50.07) at 6pm NZ time.

Fisher and Paykel Healthcare was down 20c to $23.87; Ebos Group declined 48c to $36.50; Mainfreight shed 89c to $67.01; Skellerup Holdings decreased 12c or 2.68 per cent to $4.36; and Freightways gave up 20c or 2.31 per cent to $8.47.

Vulcan Steel declined 16c or 1.94 per cent to $8.08; Scott Technology was down 9c or 2.65 per cent to $3.31; Investore decreased 4c or 2.82 per cent to $1.38; NZME shed 3c or 2.91 per cent to $1; and Smartpay Holdings was down 3c or 1.81 per cent to $1.63.

Retailers Briscoe Group was down 15c or 3.13 per cent to $4.64, and Hallenstein Glasson declined 10c to $6.11.

Vista Group, down 3c to $1.80, announced a new global senior leadership team as part of a company restructure.

Other decliners were Port of Tauranga down 7c to $6.06; Ryman Healthcare decreasing 6c to $6.67; Scales Corp falling 9c or 2.82 per cent to $3.10; and Winton Land shedding 4c to $2.46.

Summerset Group was up 8c to $10.20; a2 Milk collected 6c to $5.57; Serko gained 6c to $3.98; TradeWindow added 1c or 2.56 per cent to 40c; and WasteCo gained 0.002c or 3.08 per cent to 6.7c.

Millennium & Copthorne Hotels NZ, unchanged at $1.99, reported a 28.22 per cent fall in revenue to $60.5m and net profit of $6.17m, down 59.9 per cent, for the six months ending June. Its average hotel occupancy was 59.8 per cent compared with 38.3 per cent in the previous corresponding period.

Millennium, which operates 18 hotels in New Zealand, told the market that operations were recovering to near pre-pandemic levels and currently on track for a return to profit in the 2023 financial year.

Sister company CDL Investments was down 2.5c or 3.23 per cent to 75c after reporting a 78 per cent fall in net profit to $5.02m on revenue of $11.96m, down 75 per cent, for the six months ending June. During that period CDL reached agreements to buy 48ha of land.