MARKET CLOSE: NZ shares fall as Warehouse earnings weigh; Genesis, Restaurant Brands gain

 New Zealand shares dropped Warehouse Group fell on a slump in first-half earnings and Fletcher Building extended its decline, while Genesis Energy and Restaurant Brands rose.

The S&P/NZX50 Index fell 37.23 points, or 0.5%, to 7,140.99. Within the index, 28 stocks dropped, 14 rose and eight were unchanged. Turnover was $152.1 million.

Warehouse Group fell 2.7% to $2.50. The retailer reported a 76% drop in first-half profit to $13.6 million after it took an impairment charge against its financial services unit, recognised restructuring costs and earned less from its Red Shed department stores. Total sales rose 3.3% to $1.6 billion.

"It's clearly a bit weaker than what the market was expecting, more at the revenue line than at the bottom line necessarily," says Rickey Ward, NZ equity manager at JB Were. "It's the confirmation of a very tough consumer sector and a company that has gone backwards a bit, combined with the potential it could be removed from indices - that hasn't helped it on a day that's had negative undertones already."

Fletcher Building dropped 3.4% to $9.20. Last month the company posted a 2% gain in first-half profit that included unexpectedly weak earnings from its construction division, especially given its $2.7 billion backlog of work, while affirming annual pre-tax earnings guidance of between $720 million and $760 million.

"That's still peeling off, no new news but it appears like a portfolio that's being sold across the board, perhaps international investors trimming New Zealand exposures and moving on," Ward says. "Interest rate sensitive stocks have been out of favour for a while now, maybe it's on the back of that. It wasn't a great result, but it's come off a dollar and then some since that.

"When you look at the first half results, clearly poor, but go and look at the analyst expectations for the second half and not many of them altered their expectations. That's what the company guidance would indicate. Either they've said something on their global roadshow which has spooked some people, or this is thematic oriented."

NZX, which gave up rights to a 3c dividend, was the worst performer, down 4.5%, or 5c, to $1.06.

Sky Network Television fell 2.4% to $3.61 and Precinct Properties New Zealand dropped 2.1% to $1.185.

Genesis Energy was the best performer, up 2.1% to $2.15, while A2 Milk Co rose 2.1% to $2.48.

Restaurant Brands New Zealand gained 0.9% to $5.44. The fast-food retailer lifted fourth quarter sales 37% to $121.6 million, bolstered by gains from its Australian KFC stores. The quarterly gain lifted annual sales 28% to $497.2 million.

Outside the benchmark index, NZME dropped 2.4% to 83c. Fairfax Media says it's looking for a permanent replacement for New Zealand managing director Simon Tong, who has resigned just days before a Commerce Commission ruling on the proposed merger with NZME, a step the media companies say they need to survive a changing industry. The merger decision is due on Wednesday.

(BusinessDesk)