Sharemarket falls as reporting season kicks off - Market close

Vulcan Steel reported a 52 per cent fall in net profit for the six months ending December. Its share price rose 11c to $7.86.

The New Zealand sharemarket had a topsy-turvy day after Vulcan Steel kicked off the latest reporting season with an expected sharp fall in earnings.

The S&P/NZX 50 Index had an early rise but then bounced around to close at 11,739.68, down 18.29 points or 0.16 per cent, after reaching an intraday high of 11,763.76.

There were 56 gainers and 78 decliners on the main board with 21.87 million shares worth $80.97 million changing hands.

Matt Goodson, managing director of Salt Funds Management, said the local market felt heavy – more sellers than buyers – before “we get into the meat of the results season”.

“The economy has been pretty slow over the period of reporting for the companies and to a degree share prices have already been built into the market. It’s the outlooks that will matter,” Goodson said.

Vulcan Steel was up 11c to $7.86, turning around from an intraday low of $7.67, after reporting a 30 per cent decrease in operating earnings (ebitda) to $81.8m and a fall of 52 per cent to $26.1m in net profit for the six months ending December.

Vulcan cut its interim dividend 51 per cent to 12c a share and said business conditions remained challenging, especially in New Zealand and the steel segment in Australia.

Group sales volume was down 6 per cent to 119,122 tonnes and customers increased 4 per cent to 12,646. Operating cash flow, however, increased $89m to $105m and debt was reduced a further $42m to $298m.

Vulcan said New Zealand trading volumes are expected to begin recovering from the second or third quarter of the 2024 financial year.

Goodson said Vulcan was in a classic cycle that tends to ebb and flow on construction activity, and they made some cautiously hopeful comments for the new year.

All eyes are on the Fletcher Building finance result, which is expected to be weak. Fletcher remained in a trading halt and told the market late in the day it was considering (further) provisions and impairments; new full-year earnings guidance; the interim dividend; and chief executive’s position.

The Warehouse and Oceania Healthcare are falling out of the MSCI Small Caps Index at the end of the month and they were down 9c or 6.21 per cent to $1.36 and 2c or 2.94 per cent to 66c respectively. Oceania last traded at that level on March 30, 2020.

Synlait Milk continued to tumble, down 2c or 2.74 per cent to 71c. Goodson said Synlait had reached the stage of having to sell assets or raise capital to reduce debt by the end of March.

Fonterra has lifted its mid-point forecast milk price 30c to $7.80 per kgMS for the 2023/24 season because of the increased prices in the Global Dairy Trade auctions.

Fonterra Shareholders’ Funds increased 2c to $3.41; and a2 Milk was down 12c or 2.12 per cent to $5.55 following its stellar run.

Goodman Property Trust, down 0.005c to $2.16, told the market its $4.5 billion portfolio faces a $258m or 5.4 per cent reduction in value for the six months ending March, representing a decrease in net tangible assets of 18c per unit. The annual reduction in value will be $484.5m or 9.7 per cent.

Auckland International Airport declined 11.5c to $8.18 on a catch-up of a large trade in Australia the day before. Goodson said “a massive line of 31 million shares went through at the equivalent of NZ$8.10 a share”.

Mainfreight was down 41c to $69.70; AFT Pharmaceuticals declined 6c to $3.68; Michael Hill shed 3c or 3.33 per cent to 87c; Delegat Group fell a further 10c or 1.72 per cent to $5.70 (it was at $13.51 on February 22, 2022); and Comvita was down 7c or 3.83 per cent to a 12-and-a-half year low of $1.76.

Allied Farmers fell 7c or 8.24 per cent to 78c; Cooks Coffee was down 2.5c or 7.69 per cent to 30c; Precinct Properties shed 2.5c or 2.02 per cent to $1.215; PGG Wrightson declined 7c or 2.14 per cent to $3.20; Savor decreased 2c or 7.69 per cent to 24c; and Pacific Edge was down 0.007c or 7.22 per cent to 9c.

Ebos Group gained 25c to $36.45; Meridian Energy was up 6.5c to $5.615; Ventia Services increased 8c or 2.29 per cent to $3.58; and NZME gained 2c or 2.04 per cent to $1.

TruScreen, down 0.001c or 3.85 per cent to 2.5c, has launched a one-for-three rights issue to raise $2.8m. TruScreen’s cervical screening procedure has been approved for reimbursement by most private health insurance companies in Saudi Arabia.