Ebos slumps to 13-month low, leading NZX50 lower

Ebos Group led the S&P/NZX 50 index lower after the healthcare products maker slumped to a 13-month low as investors were disappointed by its cost controls and the prospect of a smaller lift in earnings than they anticipated.

That was in contrast to Chemist Warehouse-owner Sigma Healthcare in Australia, which rallied on its increased profit and more ambitious cost-cutting programme.

Meanwhile, Meridian Energy dipped after reporting a predictably soft result after the 2024 power crunch, and saying the board might review future dividends in the event of a severe drought to make sure it maintains its credit rating.

And economic growth minister Nicola Willis unveiled a series of tweaks aimed at accelerating consenting for new supermarkets to stoke more competition in the grocery sector, while across the Tasman, Woolworths sank after fell short of earnings expectations, with the New Zealand arm a stand-out performer for the supermarket chain.

Lagging Asia

The NZX50 dropped 96.14 points, or 0.7%, to 12,861.84, with 22 stocks declining, 18 gaining, and 10 unchanged. Turnover was $150.2 million across the main board, with Ebos accounting for $46.9 million of that.

The local bourse was the worst performer across Asia, with investors largely in a holding pattern ahead of Nvidia’s quarterly earnings result on Wednesday in the US after trading closes. Infratil declined 1.5% to $11.805.

Ebos led the local bourse lower as it fell to its lowest level since July last year, ending the day down 14% at $33.85. The animal and healthcare products maker lifted annual earnings 7.5%, and forecast a slightly slower pace of growth in the year to come, but that fell short of investors’ expectations.

“The market’s not taking too kindly to companies that don’t come in where they’re expected to or guided to,” said Peter McIntyre, an investment adviser at Craigs Investment Partners. “Their revenue line was around what most brokers had been anticipating, but the cost out programme has been deferred to 2026.”

In contrast, ASX-listed Sigma Healthcare, the parent of Chemist Warehouse, was up 6% after posting a 41% increase in annual profit and upgraded its programme to cut costs.

Meridian Energy slipped 0.6% to $5.42 after reporting a 32% decline in annual earnings, while reporting an unchanged dividend. The board said it will review dividends in future severe droughts, to make sure the power company maintains its credit rating.

Summerset Group Holdings fell 1.6% to $10.53 ahead of its first-half result on Thursday, while Ryman Healthcare declined 3.2% to $2.41.

Precinct Properties NZ decreased 0.4% to $1.265 after reporting adjusted funds from operations slightly below expectations, while lowering the payout range as a result of reviewing its dividend policy.

An apple a day

Scales Corp rose for a fourth day as it posted the biggest gain on the benchmark index, up 2.9% at $5.05, and hitting a three-year high as brokers welcomed the horticulture firm’s strong first-half result.

Other gainers including Property for Industry, up 2.2% at $2.38, while KMD Brands rose 2.1% to 24 cents and a2 Milk Co advanced 1.9% to $10.30.

Air New Zealand rose 0.9% to 58.5 cents ahead of reporting on Thursday, while Auckland International Airport was the most heavily traded stock on a volume of 1.8 million, gaining 0.4% to $7.60.

Outside the benchmark index, Winton Land decreased 0.5% to $2.07 in very light trading after the property developer reported a 28% decline in annual earnings as the property market remains subdued.

Comvita was unchanged at 76 cents, with 1.4 million shares traded on the day, including a single trade of almost 1.3 million shares at 76 cents.

Meanwhile, economic growth minister Nicola Willis announced plans to make legislative and regulatory changes to accelerate the consenting process for new supermarkets as a means to improve competition in the grocery sector, after its request for information from market participants.

The government refrained from imposing major reform on the duopoly operators of Foodstuffs and Woolworths while a cost-benefit analysis on restructuring is underway.

“Our objective is a more competitive grocery market that delivers better prices and more choice for Kiwi shoppers,” Willis said in a statement. “We remain open to potential market-led solutions that may be put forward by the major incumbents.”

ASX-listed Woolworths was one of the major drags on the S&P/ASX 200 index, sinking 14% after slashing its final dividend with the Australian supermarkets and Big W weighing on the business. The New Zealand unit outperformed, lifting its annual earnings 40%.

The kiwi dollar traded at 58.46 US cents at 5pm in Auckland from 58.40 cents yesterday.

Reporting by Paul McBeth. Image from Curious News.