MARKET CLOSE: NZ shares fall, led by SkyCity

New Zealand shares fell, pushing the S&P/NZX 50 Index down from a record high, as SkyCity Entertainment Group posted full-year profit growth that missed some analyst forecasts, underlining the high expectations built into earnings season this year.

Sky Network Television, NZX and Air New Zealand paced the decline.

The NZX 50 fell 13.55 points, or 0.2%, to 7349.61, having gained more than 16% this year. Within the index, 24 stocks fell, 20 rose and seven were unchanged. Turnover was $167 million.

SkyCity dropped 3.5% to $4.96 after reporting a 13% gain in full-year profit to about $146 million as sales rose 9.1% to $1.1 billion. Analysts at First NZ Capital had expected profit before one-time items of $156 million.

"This could be a little bit of a theme for the reporting season, where companies are not going to match the high expectations set," said Grant Williamson, a director at brokerage Hamilton Hindin Greene. "The market has possibly run a little bit too hard."

Air New Zealand, which is scheduled to report full-year results on August 26, dropped about 2% to $2.225. First NZ Capital is forecasting a 75% surge in profit but added that with "a significant step up in competition", outlook comments on yield, load factor and fixed cost leverage in FY17 "will be crucial".

Sky TV, which also reports annual results on August 28, fell 1.8% to $4.89. The nation's largest pay-TV operator said annual sales were $927 million and underlying earnings before interest, tax, depreciation and amortisation were $336 million as part of a presentation on its planned merger with Vodafone NZ announced in June.

NZX, the market operator, fell 1.9% to $1.02 and Freightways, the courier and document handling company, dropped 1.6% to $6.66.

Hallenstein Glasson Holdings, whose shares dropped yesterday when the clothing chain said full-year sales were close to the previous year's result and profit fell 22% to about $13.5 million, rebounded, rising 4.5% to $2.80.

"Hallenstein has been pretty weak and the directors came out and said what they are doing to correct that," Mr Williamson said.

Kathmandu, the outdoor clothing chain, continued its rally, rising 2% to $2. Last week, the retailer said its annual profit rose as much as 67% on fatter margins. "Investors are thinking the turnaround they have seen in sales and margins can continue, that it isn't just a one-off," Mr Williamson said.

Summerset Group, the retirement village operator that reports next Monday, rose 2.6% to $4.82 and was the biggest gainer on the index.

Chorus rose 1.7% to $4.50, Heartland Bank gained 1.5% to $1.40 and Trade Me Group rose 1.4% to $4.99.

Outside of the benchmark index, TeamTalk fell 2% to 48c. TeamTalk said today it had hired investment bank Cameron Partners for a strategic review of the telecommunications company just three weeks after appointing a new chief executive.

(BusinessDesk)

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