Market Close: NZ sharemarket dips; Turners rises, Heartland hit by impairment

Heartland Group announced a $49.6 million impairment, expecting a first-half net profit of $2 million to $5 million.

Turners Automotive upgraded its earnings, Heartland Group took a near $50 million write-off and the New Zealand sharemarket was down slightly while interest rates were cut in Australia.

The S&P/NZX 50 Index took a dive mid-afternoon and then recovered to close at 13,051.12, down 17.81 points or 0.14% after reaching an intraday high of 13,123.98.

Volumes were strong with 42.17 million shares worth $237.16m changing hands.

Matt Goodson, managing director of Salt Funds Management, said there are a lot of moving parts in the market at present with a range of financial results and portfolio flows – and volatility has picked up.

Heartland Group fell 16c or 14.81% to 92c after announcing a $49.6m impairment expense for the New Zealand bank in the six months ending December, relating to arrears in the motor finance and business lending portfolios and ongoing deterioration in economic conditions.

Heartland now expects a first-half net profit of $2m-$5m. The impairment included writing off $12.1m arrears greater than 365 days in the motor finance and Open for Business loan portfolios, and $8.1m in business-as-usual activity.

Turners Automotive rose 28c or 4.96% to $5.92 after upgrading its full-year gross profit guidance to at least $53m, 8% ahead of last year’s. It will be the fifth consecutive record profit for the company.

Turners said it is expecting the second half of the 2025 financial year for all four divisions – auto retail, finance, insurance and credit management – to be ahead of the previous corresponding period.

Goodson said the Heartland impairment fulfilled the worst fears about the quality of the bank’s lending a few years ago.

“It involved lending that was less than disciplined in terms of credit ratings and the new management has drawn a firm line in the sand on the older business.

“A lot of the economic weakness has been skewed to construction and machinery, where Heartland had decent exposures. Their reverse mortgage and Australian rural businesses are still performing well,” Goodson said.

“Turners had another upgrade and they steered clear of lower-quality lending. The diversified nature of their business model is shining through and they have performed well through the recession,” he said.

Across the Tasman, the Reserve Bank of Australia (RBA) cut its official rate to 4.1% from 4.35% where it had been since November 2023 and was the highest level for 13 years. It was the first reduction in interest rates for four years.

The Australian central bank said monetary policy had been restrictive and would remain so after this reduction. “If monetary policy is eased too much too soon, disinflation could stall and inflation would settle above the midpoint of the target range.”

Back at home, Infratil was up 20.5c or 1.87% to $11.18 on trade worth $48.82m. Infratil increased its stake in CDC data centres to 49.75%, paying A$216m ($240m) for a further 1.58% alongside Australian Future Fund’s purchase of 10.46% from the Commonwealth Superannuation Corp.

The deals represent an equity value of A$13.7 billion for CDC, and Infratil said CDC continues to make significant progress bringing capacity online – with two new campuses at Laverton, Melbourne and Marsden Park, NSW under development.

Freightways was down 26c or 2.25% to $11.27, giving back nearly half its gain of the day before following its solid half-year result.

Fisher and Paykel Healthcare eased 43c to $35.35; Spark declined 5c to $2.93; Auckland International Airport was down 13c to $8.42; Mercury Energy shed 13c or 2% to $6.36; and Channel Infrastructure decreased 4c or 2.02% to $1.94.

Napier Port was down 7c or 2.55% to $2.68; The Warehouse declined 4c or 3.85% to $1; Bremworth decreased 2c or 3.39% to 57c; Smartpay shed 2c or 3.23% to 60c; and Burger Fuel fell 2.5c or 6.85% to 34c.

Contact Energy was up 18c or 1.97% to $9.33; a2 Milk climbed a further 26c or 3.31% to $8.12; Ebos Group gained 58c to $42.07; Tourism Holdings increased 5c or 2.67% to $1.92; and Michael Hill added 2c or 3.92% to 53c.

NZX rose 6c or 3.92% to $1.59; Ventia Services increased 15c or 3.61% to $4.30; T&G Global was up 3c or 1.88% to $1.63; PGG Wrightson added 4c or 1.9% to $2.15; and Synlait Milk gained a further 9c or 9.78% to $1.01.

Meridian Energy, down 12c or 1.98% to $5.94, has gained Environment Court consent to build the 90MW Mt Munro Wind Farm near Eketāhuna, producing 300GWh of electricity each year – enough to power 42,000 average homes.

Meridian warned the country is heading towards another winter set to highlight the challenges facing the electricity system when experiencing a shortage of fuel, whether that’s low lake levels or gas shortage. “We need more [renewable] generation capacity to boost security of supply.”