Spark New Zealand sank 19% in its single biggest daily fall as the country’s biggest telecommunications company’s gloomy result cast a pall over the broader market.
The telco’s shares fell 55 cents to $2.38 as it shed $1.01 billion from its market value and traded near an 11-year low. Spark downgraded its earnings guidance when reporting a soft first-half result, blaming the protracted economic downturn for its persistently weak earnings and slow traction in stripping out costs.
“It’s not often you see 20% moves in big companies’ share prices,” said Greg Smith, head of retail at Devon Funds Management. “We’ve seen it on the upside with a2 and the downside from Spark.”
The a2 Milk Co jumped 19% on Monday when it reported better than expected earnings with a revival in Chinese demand and was up 3.2% today at $8.51.
The S&P/NZX 50 index dropped 127.78 points, or 1%, to 12,752.58, taking its weekly decline to 1.8% as the telco’s savage selloff had it vying with Heartland Group Holdings for the worst performance of the week.
Spark dropped 18% for the week compared to Heartland’s 19%. The financial services firm was down 4.4% at 87 cents today, having slumped on Tuesday when it said it faced increased charges on bad debts.
Turnover across the main board was $196.9 million, with Spark accounting for $43.1 million with 18 million shares changing hands.
Houston, we have a problem
Sky Network Television fell 3.1% to 2.52 after the pay-TV operator reported a decline in first-half earnings as it faced increased costs from its problematic satellite migration and softer demand as household budgets remain stretched. Still, it hiked its dividend given the costs were largely one-offs.
“People are cutting back on subscriptions and their discretionary expenditure, but churn wasn’t too bad,” said Devon’s Smith.
Genesis Energy declined 3.4% to $2.28 after lifting first-half earnings 7%, while Winton Land fell 3.1% to $1.85 after reporting a first-half loss of $100,000 on slow property settlements, and said it didn’t think the construction cycle had hit its bottom yet.
Fletcher Building, which reported a first-half loss yesterday, rose 2.1% to $3.34.
Millennium & Copthorne Hotels New Zealand was unchanged at $2.40 after saying it won't pay a final dividend because its suitor and cornerstone shareholder City Developments Ltd didn't agree to waive its takeover condition on the payment to shareholders. The Singaporean-listed company is offering $2.25 to buy out minority shareholders, a price the hotel operator's independent directors said is too low.
Stock market operator NZX posted the biggest daily gain on the bourse, up 5.7% at $1.67 after reporting a 21% lift in annual earnings and declaring an unchanged final dividend of 3.1 cents per share.
Fonterra Shareholders’ Fund unit advanced 4.7% to $5.35 after the dairy cooperative said annual earnings were on track to be at the upper end of its 40-to-60 cents guidance range, with helpful weather boosting milk collection. Synlait Milk declined 2.2% to 91 cents.
The kiwi dollar held on to the day’s gains, trading at 57.68 US cents at 5pm from 57.62 cents at 7am and 57.14 cents yesterday. The local currency was buoyed by US President Donald Trump commenting that a trade deal with China was a possibility.
Reporting by Paul McBeth. Image from Curious News.