Article – BusinessDesk
July 31 (BusinessDesk) New Zealand shares fell after Pumpkin Patchs chief executive departed, Fonterra Shareholders Fund investors fretted returns will be hurt by farmer payments and Mainfreight said earnings are lagging last years …
MARKET CLOSE: NZ shares fall; Pumpkin Patch, Fonterra, Mainfreight drop
July 31 (BusinessDesk) – New Zealand shares fell after Pumpkin Patch’s chief executive departed, Fonterra Shareholders’ Fund investors fretted returns will be hurt by farmer payments and Mainfreight said earnings are lagging last year’s on tough times in Australia.
The NZX 50 Index fell 12.6 points, or 0.3 percent, to 4537.985. Within the index, 30 stocks fell, 15 gained and five were unchanged. Turnover was $115 million.
Pumpkin Patch, the children’s clothing chain, dropped 3.3 percent to 87 cents after the departure yesterday of CEO Neil Cowie. He surfaced today after Mitre 10 (New Zealand), the country’s biggest hardware store chain, named him as its new chief.
Pumpkin Patch’s strategy “has not changed but you’ve lost the person to implement it,” said Rickey Ward, equities manager at Tyndall Investment Management.
He said there was some talk that Di Humphries, who quit Hallenstein Glasson Holdings last year to become merchandise and brand director at Pumpkin Patch, could be a contender. She had a strong reputation though she wasn’t well known to investors in her current role, he said.
Hallenstein fell 0.6 percent to $4.72. Like Pumpkin Patch, the company has warned profits are being hurt by fierce competition in the Australian market.
Mainfreight, the international logistics firm, dropped 2.5 percent to $10.75 after telling shareholders at their annual meeting that earnings are a little behind a year ago, and it is quitting parcel freight in Australia as the business weighs on its unit across the Tasman
Managing director Don Braid told shareholders at today’s annual meeting earnings before interest, tax, depreciation and amortisation to the end of May were 2.5 percent behind the same time a year earlier as “conditions remain difficult.”
Ebos Group, which made its biggest-ever purchase in Australia this year, fell 1.2 percent to $10.05 and outdoor equipment retailer Kathmandu declined 0.7 percent to $2.68.
“Anything with Australian earnings has got a big question mark on it at the moment,” Tyndall’s Ward said. The strong kiwi against the Australian dollar is adding to their woes, he said.
Fletcher Building, which counts Australia as its second-largest market, fell 0.4 percent to $8.13.
Fonterra dropped 2.5 percent to $7.30 after the dairy giant raised its forecast payout to farmers for the 2014 season by 50 cents to $7.50 per kilogram of milksolids amid slow global supply and a weaker kiwi dollar. Investors are concerned Fonterra must trade off the benefits to its farmers against returns to its unit holders, because it erodes profit.
“It is not necessarily to the benefit of investors,” Ward said.
Xero, the cloud-based accounting firm, fell 1.1 percent to $17.30 after its quarterly cash flow figures showed costs were rising ahead of sales, causing it to burn through cash.
Telecom edged up 0.2 percent to $2.25.
Rakon was unchanged at 25 cents after managing director Brent Robinson and his brother and executive director Darren Robinson agreed to sell some 493,000 recently purchased shares each after the transactions breached the Takeovers Code.