Article – BusinessDesk
March 20 (BusinessDesk) – New Zealand shares dropped, led lower by Fletcher Building’s earnings downgrade, with Metlifecare and Metro Performance Glass also falling.Monday 20 March 2017 05:38 PM
MARKET CLOSE: NZ shares down, dragged by Fletcher, while Metlifecare, Metro Glass fall
By Sophie Boot
March 20 (BusinessDesk) – New Zealand shares dropped, led lower by Fletcher Building’s earnings downgrade, with Metlifecare and Metro Performance Glass also falling.
The S&P/NZX 50 Index fell 101.1 points, or 1.4 percent, to 7,057.04. Within the index, 36 stocks dropped, eight rose and six were unchanged. Turnover was $207.6 million.
Fletcher led the index lower, down 10.2 percent to $8.28. The stock was placed in a trading halt on Friday, but the shares tumbled after the company cut its full-year earnings guidance by about $110 million because of complexity and delays with a major development that showed up during a review of its construction division.
“The market’s had all weekend to speculate, from an earnings perspective it’s come from a more negative side of things – 15 percent down for the year,” said Michael De Cesare, research analyst at Nikko Asset Management. “The reaction was quite firm early but when Australia opened it finished up, it had gotten as low as $8. You never know with Australia, given they’re big holders of the name, whether they’ll give the extra hammer blow or in this case they’ve bid it back up.”
The downgrade comes less than four weeks after Fletcher affirmed its earlier guidance with its first-half results, which included just $1 million contribution from its New Zealand construction business, despite gross revenue from construction soaring 54 percent to $1.15 billion in the first half. The slump reflected losses incurred on a major construction project, which it didn’t identify, and it kept the identity of the project secret today, citing client confidentiality.
“It’s disappointing that there’s suddenly new meaningful information to provide to the market, it always leaves one somewhat skeptical about whether that would’ve been known in the first instance and could’ve been incorporated in the result,” De Cesare said.
The index’s weakness was partly explained by Fletcher Building’s drop, which is 7.3 percent of the index, but the local benchmark saw broad-based weakness today led from offshore, with the ASX 200 down 0.5 percent as of 5:30pm New Zealand time.
“We tend to take a lead from Australia when they open, if they’re having a down day we get dragged into it,” De Cesare said. “Overnight we’ll see if global markets continue the negative tone they finished the week before on or they’ll keep on pushing record highs – it will give some direction to what’s going on here.”
Auckland International Airport, which gave up rights to a 10 cent dividend, dropped 3 percent or 21 cents to $6.85. Metlifecare fell 2.4 percent to $6.05 and Metro Performance Glass dropped 2.1 percent to $1.43.
Meridian Energy was the best performer, up 1.4 percent to $2.84, while NZX gained 1 percent to $1.05 and Ebos Group rose 0.7 percent to $18.30.