MARKET CLOSE: Shares fall on Nuplex profit warning, rising NZOG exploration costs
New Zealand shares fell. Nuplex Industries dropped to a nine-month low after cutting its full-year earnings guidance. New Zealand Oil & Gas declined after it said costs for its offshore explorations in the Taranaki Basin had climbed to US$40 million from US$27 million.
The NZX 50 Index fell 7.946 points, or 0.2 percent, to 5179.403. Within the index, 25 shares fell, 18 rose and seven were unchanged. Turnover was $81.6 million. Trading on the NZX was halted for 20 minutes this morning, owing to a system error in the stock market operator's software.
Nuplex declined 4.2 percent to $3.22 after the industrial chemical maker cut its full-year earnings guidance for a second time, saying competition across its Australia and New Zealand business has squeezed margins for both resins and specialty chemicals. Earnings before interest, tax, depreciation and amortisation for the 12 months ending June 30 are now expected to be between $121 million and $125 million, compared with guidance issued four months ago for ebitda to fall within the lower end of a range of $130 million to $145 million.
"For long suffering shareholders, who have been waiting for the transformational strategy to turn the business around by cutting costs and so on, it is another disappointment that that process is still ongoing," said James Smalley, director at Hamilton Hindin Greene. "One could say investors didn't really set the bar too high for Nuplex, although it has always disappointing to have a downgrade. The market wasn't expecting great things from the company anyway."
NZOG fell 4.3 percent to 78 cents after announcing the cost of the US$27 million exploratory Oi well offshore Taranaki has risen to US$40 million, largely as a result of the drilling partners being forced to plug and abandon the first well, which encountered technical difficulties at a depth of 1,507 metres. The well is a partnership between operator AWE (31.25 percent), Pan Pacific Petroleum (50 percent) and New Zealand Oil & Gas, (18.75 percent), with costs of the re-drill to be borne by the partners in proportion to their shareholdings in the prospect.
Pacific Edge climbed 7.1 percent to 91 cents to be the best performer on the day. The Dunedin-based biotech company has declined 35 percent year to date as investors mulled whether its high share price would match its potential earnings growth.
"It looks like a couple of large existing investors were liquidating their holdings. Now that selling pressure has eased, the stock is bouncing back up," Smalley said.
Telecom declined 1.1 percent to $2.685. Ryman Healthcare slipped 1.2 percent to $8.37. Fisher & Paykel Healthcare fell 0.9 percent to $4.67.
Fletcher Building rose 1 percent to $9.24. Sky Network Television advanced 0.5 percent to $6.65.
Outside the benchmark index, Burger Fuel Worldwide slipped 0.4 percent to $2.51. The burger chain said full-year sales rose 20 percent to $14.4 million while profit dropped 63 percent to $401,000 as the company chased growth, expanding its stores in Australia, New Zealand and the Middle East.
"The market will probably continue to give them quite a bit of leeway results versus share price while they're in this growth stage, but sooner or later investors will want to see some bottom line earnings," Smalley said.
Outside the bourse, Serko, the online business travel booking company, said it had closed the retail portion of its share offer nine days early and may scale back public share requests after strong investor demand. It expects to list on the main board of the NZX on June 24, and will allocate shares to a mixture of NZX firms, New Zealand and Australian institutions and retail shareholders, but the number of shares that public pool investors receive may be lower than the number requested, it said in a statement.