Market close: Shares hit four-year high before Telecom, Fletcher results

BUSINESSDESK: New Zealand shares yesterday rose to their highest level since May 2008 on expectations the biggest companies on the bourse, Telecom and Fletcher Building, will post earnings growth this week, while Rakon announced expansion in China.

The NZX 50 Index rose 21.42 points, or 0.6%, to 3661.08. Within the index, 23 stocks rose, 17 fell and 10 were unchanged. Turnover was $96.5 million.

Telecom, the telecommunications company rose 2.1% to $2.74 and has gained about 30% this year.

The company posts its full-year results on Friday and Forsyth Barr analyst Guy Hallwright has forecast a 14% increase in sales to $4.7 billion and a 37% rise in reported profit to $330 million.

Fletcher Building, New Zealand largest construction company, gained 0.3% to $6.57, the highest in more than four months.

Its full-year results are set for release on Thursday and will show an 18% increase in sales and a 0.7% rise in earnings before interest depreciation and amortisation, Forsyth Barr says.

"Both stocks have benefitted from increased investor interest of late," he said. "In both cases there has also been a change in management and it will be interesting to see what that means for strategy."

Fletcher Building has named Mark Adamson Formica executive as new chief executive, replacing Jonathan Ling starting on October 1. Simon Moutter will become Telecom CEO on September 1.

Chorus, the telecommunications network operator spun out of Telecom last year, increased 1.9% to $3.25.

Rakon, the communications components maker which dropped out of the NZX 50 Index in June, soared 19% to 50 cents. The company today announced a deal with Huawei Technologies, quadrupling its sales to the Chinese-based company to $US56 million over the next five years.

The gainers were led by Pumpkin Patch, the children's clothing retailer, up about 5% to $1.06. OceanaGold Corp, which operates the Macraes gold field near Dunedin, climbed 4.5% to $3.03.

The decline was led by Cavalier Corp down 5% to $1.66.

The Auckland-based carpet maker turned a full-year loss of $1.6 million in the 12 months ended June 30, on costs to restructure its business in response to deteriorating trading conditions in New Zealand and Australia.

NZX, the stock exchange regulator, fell 3.5% to $1.10 after posting a 28% drop in first-half profit as revenue growth stalled and expenses rose, squeezing its earnings margins. Profit was $3.25 million in the six months ended June 30, from $4.5 million a year earlier.

Shares in Hallenstein Glasson Holdings fell 2.1% to $4.30 even after the clothing chain said its full-year earnings rose as much as 14% on increased sales and the contribution from insurance relating to the Christchurch earthquakes.

PGG Wrightson, New Zealand's largest agricultural company, fell 3% to 31 cents. Vector, the electricity and telecommunications networks owner, slipped 0.7% to $2.72.