Market close: NZ shares fall from highs ahead of earnings

BUSINESSDESK: New Zealand shares fell in the lead up to earnings season amid speculation prices have strengthened enough already to reflect the outlook for stronger earnings.

The decline was paced by Telecom, Ryman Healthcare and Mainfreight.

The NZX 50 Index fell 3.02 points, or 0.1%, to 3581.79. Within the index, 22 stocks rose, 19 fell and nine were unchanged. Turnover was $99 million.

New Zealand’s listed companies will lift normalised profit by a median 7%, based on Forsyth Barr’s forecasts for 43 companies that it follows. Sales are expected to rise by 3.8%.

"Leading into the results season people are thinking about where the numbers end up," Shane Solly, portfolio manager at Mint Asset Management, said. "There is a little more profit-taking – that is not surprising."

Telecom, the largest company on the exchange, fell 2.6% to $2.66 after rising to its highest level since August 2008 yesterday. Telecom is scheduled to release its full-year results on August 24.

The teleco's normalised earnings are expected to rise about 37% to $330.2 million, according to brokerage Forsyth Barr.

Mainfreight fell 1.6% to $9.20 before its earnings are released tomorrow.

"People are obviously looking to see what the global slowdown has meant," Mr Solly said. "We are seeing a bit of profit taking ahead of that result."

Shares in Ryman Healthcare, New Zealand's largest retirement village operate, fell 1.4% to $3.56.

Fletcher Building, the largest listed construction company, rose 1.4%to $6.43.

The decline was led by Cavalier, the carpet and wool scouring group, which dropped 3.1% to $1.58.

Michael Hill, the listed jewellery maker, increased 2.9% to a $1.05, the highest in more than a month. The stock has gained 17% so far this year.

Pumpkin Patch, which sells children's clothing, advanced 1.1% to 91 cents, while Hallenstein Glasson Holdings, the clothing retailer, rose 0.5% to $4.28.

"It is sign consumers are feeling more confident to put their hands into their pockets – spending money on smaller-ticket items," Mr Solly said.

The gainers were led by OceanaGold, which operates the Macraes gold mine near Dunedin, up 7.9% to $2.86. Goodman Fielder, the food manufacturer, rose 4.9% to 64 cents and Trade Me Group, the popular auction site, was up 1.1% to $3.77.