MARKET CLOSE NZ shares fall as SkyCity earnings disappoint, Fonterra slips

New Zealand shares fell after SkyCity Entertainment Group posted a drop in earnings and weak results from its Auckland operations, while Fonterra Shareholders' Fund fell after the dairy giant's New Zealand Milk chief resigned. Port of Tauranga rose to a month-high.

The NZX 50 Index fell 1.233 points, or 0.03 percent, to 4524.588. Within the index, 21 stocks fell, 22 rose and seven were unchanged. Turnover was $118 million.

SkyCity fell 4.2 percent to $3.93, a seven-month low, after the casino and hotel company posted an 8 percent drop in full-year profit that included weaker earnings from its Auckland business. Normalised earnings before interest, tax, depreciation and amortisation in Auckland, the company's biggest operation, fell 1 percent to $210 million.

"Clearly it has been very hard to stimulate growth out of the Auckland asset. They have tried a number of initiatives," said Matthew Goodson, managing director at Salt Funds Management. "Gambling is a tough industry in New Zealand and revenue is flat."

SkyCity also highlighted the impact of a strong kiwi dollar against the Australian dollar, which eroded the value of revenue across the Tasman. A high kiwi is going to be "a significant headwind" for New Zealand companies with businesses in Australia, Goodson said.

Ebos Group, which made its biggest ever investment this year in Australia, fell 2.1 percent to $9.50. Pumpkin Patch, the children's clothing chain that counts Australia as its biggest market, fell 1.2 percent to 85 cents. Hallenstein Glasson Holdings fell 1.1 percent to $$4.70 and Michael Hill International dropped 0.8 percent to $1.28.

Among other retailers, Warehouse Group shed 0.8 percent to $3.77.

Port of Tauranga rose 1 percent to $14.65, the highest in almost a month, after announcing this week an expansion of its MetroPort inland port facility in south Auckland and an agreement to take a half stake in PrimePort Timaru, which it wants as a feeder for Tauranga, where it is dredging its hub port to allow for larger vessels.

"Port of Tauranga continues to demonstrate the benefits of its industry leadership position," Craigs Investment Partners analyst Arie Dekker said in a note. The MetroPort and Timaru port announcements "provide confidence in the hubbing strategy and POT's opportunity to play a role in industry consolidation over time."

Fonterra fell 0.4 percent to $6.90 after the dairy company's tainted food scare claimed its first scalp with the resignation of NZ Milk Products managing director Gary Romano.

Freightways rose 1.7 percent to $4.15 after posting earnings yesterday that met guidance even as its express package business recorded a decline in the second half.

"The stock appears modestly undervalued compared to our fair value and is trading at an attractive dividend yield of 4.9 percent," research firm Morningstar wrote in a report. "The company generates very healthy and stable cash flows and has minimal working capital and capital expenditure requirements."

Telecom fell 0.4 percent to $2.285 and Fletcher Building gained 0.2 percent to $8.24.

(BusinessDesk)