MARKET CLOSE: Shares fall; Sky TV, Spark, Fletcher decline ahead of earnings

New Zealand shares fell as investors wait for more companies to report as the country's gloomier economic outlook hangs over the earnings season. Sky Network Television, Spark New Zealand and Fletcher Building declined.

The S&P/NZX 50 Index slipped 16.66 points, or 0.3 percent, to 5710.76. Within the index, 14 stocks fell, 27 rose and nine were unchanged. Turnover was $152 million.

Expectations for New Zealand economic growth is cooling after a sharp extended decline in dairy prices looks set to weigh on the country's rural sector, and eroded business confidence, which is at the most pessimistic level in six years. Earnings season kicked off last week, but traders are waiting for more companies to report their financial statements to get a better gauge on the outlook for the coming year.

Among blue-chip companies due to report this week, Sky TV fell 2.5 percent to $2.71, leading the benchmark index lower. Spark, formerly Telecom Corp, dropped 2.3 percent to $2.71. Fletcher, the construction and building supplies firm, declined 1.8 percent to $7.58.

"It'll be more the outlook statements that people will be focusing on," said Matthew Goodson, managing director at Salt Funds Management. "If you look at things like the monthly business confidence reading it does have a pretty strong correlation with future GDP (gross domestic product) growth and future earnings, and that has come off somewhat of late."

Heartland New Zealand rose 0.9 percent to $1.13. The Auckland-based lender posted a 34 percent gain in full-year profit to $48.2 million on growth in income from retail and consumer lending, and affirmed its guidance for further earnings growth in 2016.

"They've already given quite strong guidance for the coming year - obviously provincial New Zealand is under pressure at the moment, and how that affects them remains to be seen," said Goodson.

Freightways was unchanged at $5.65. Yesterday, the company, whose courier and logistics services are seen as a bellwether for the local economy, reported a 4 percent lift in annual profit to $43.3 million but warned New Zealand's faltering growth is likely to slow in the next financial year.

Dual-listed Australia & New Zealand Banking Group fell 1.6 percent to $32.80. The Australian bank's local unit reported a flat nine-month profit of $1.26 billion as an increase in charges on bad debts outpaced the lender's gains in interest income.

Metro Performance Glass was the best performer on the day, up 9.1 percent to $1.44. Yesterday the regulatory arm of the stock market operator queried the glass manufacturer's sharp share price decline after the stock fell 17 percent, or 27 cents between Aug. 3 and today. Metroglass confirmed it continues to comply with continuous disclosure and couldn't explain the drop in share.

"It had been sold off extremely aggressively and they had a speeding ticket from the exchange yesterday but had nothing to report - on the back of that they've bounced today," Goodson said. "There's some people in the market questioning whether they'll make their prospectus guidance or not, so they're comments at their upcoming AGM will be quite important, but the stock certainly has come off a long way. One would think they'd have a tail wind with the amount of housing activity to come."

Outside the benchmark index, Trilogy International advanced 4.3 percent to $1.46 after the skincare products and scented candle maker agreed to buy privately held CS Company, New Zealand's largest independent importer and distributor of fragrances, cosmetics and toiletries, for $37 million in a debt-funded purchase

SeaDragon, which manufactures fish oil for health supplements, plunged 30 percent to 0.7 of a cent after it said it wants to raise as much as $9 million through a discounted rights issue to help finish building its Nelson refinery, which has gone over-budget.

(BusinessDesk)