The S&P/NZX 50 index extended its rally for a fourth session as the first day of earnings season proper delivered relatively upbeat results from Freightways, Contact Energy, and a2 Milk Co.
Comvita soared after Christchurch’s Stewart family lobbed in a $56.4 million takeover bid, taking the honey products maker back to where it was at the start of the year.
Meanwhile, Vulcan Steel ended its recent rally, following Australia’s BlueScope Steel lower after the ASX-listed steelmaker’s earnings were buffeted by a writedown of its US business and as Aussie manufacturers get squeezed by rising gas prices.
And building and construction minister Chris Penk announced sweeping changes to the building liability regime – switching joint and several liability for proportionate liability – and let councils amalgamate their consenting functions to speed the permitting regime.
White gold
The NZX50 rose 81.26 points, or 0.6% to 12,970.64, with 31 gainers, 15 decliners and four stocks unchanged. Turnover was $147.1 million, of which a2 Milk Co accounted for $40.3 million.
Earnings season kicked up the pace today with power company Contact Energy, courier operator Freightways and infant formula firm a2 Milk Co delivering their annual results.
The a2 Milk Co posted the strongest gain among those reporting, up 2.6% at $8.95 on an unusually large volume of 4.5 million shares. The infant formula maker reported a 17% increase in annual earnings on record sales of $1.9 billion, while announcing the sale of its stake in Mataura Valley Milk and the acquisition of Yashili New Zealand and its Pokeno site. It declared an 11.5 cents per share dividend, taking the annual return to 20 cents.
“There was something for everyone in that result with the purchase and sale of different production facilities, as well as the result itself,” said Matt Goodson, managing director at Salt Funds Management. “It’s clear they’re doing a good job in China and are winning share as a premium brand, but the market’s still not what it was.”
Freightways rose 1.6% to $11.74 after reporting a 6.3% increase in annual earnings and declaring a final dividend of 21 cents per share, taking the annual return to 40 cents, up 8% on the prior year.
Goodson said Freightways posted a solid result, which boded well for the economy given it’s a bellwether stock for general activity.
“There are some encouraging signs there,” he said.”
Meanwhile, Contact gained 1.3% to $9.05 after lifting annual underlying earnings 17% and raising the annual dividend 5% to 39 cents per share.
Big and beautiful
Infratil, which took a 9.5% stake of Contact in the Manawa Energy deal, gained 2.2% to $12.205 after saying US guidance on changing tax credits for renewable energy were positive for its Longroad unit, which expects to have 5 gigawatts of projects qualifying for the federal government support. Infratil hosts shareholders at its annual meeting in Auckland on Tuesday.
Vector led the benchmark index higher, up 3.7% at $4.53, while Gentrack gained 2.9% to $10.14.
Vulcan Steel posted the biggest decline on the NZX50, falling 5.4% to $6.90 and snapping a four-day gain. The steel products firm followed Australia’s BlueScope lower after the steelmaker posted a slide in profit as it wrote down the value of its US business and faced a squeeze on margins from rising gas prices.
Steel & Tube slipped 1.4% to 70 cents.
Fletcher Building rose 0.3% to $3.14 after building and construction minister Chris Penk announced changes to the building liability regime aimed at speeding the consenting process. Councils will be cleared to merge their consenting authorities, and building liability will switch from joint and several liability to a proportionate regime.
Outside the benchmark index, Comvita surged 58% to 76 cents after Mark Stewart’s Masthead won over the honey company’s board and cornerstone shareholders China Resources and Li Wang, with an 80 cents per share takeover offer, through a scheme of arrangement with health and wellness exporter Florenz.
Goodson said the sector has been in deep trouble in recent times, with few barriers for new producers and dwindling demand.
The BNZ-BusinessNZ performance of services index showed a slowing pace of contracting activity in July, the latest piece of data showing early signs of life in the economy.
The kiwi dollar traded at 59.39 US cents at5 pm in Auckland from 59.21 cents last week.
Reporting by Paul McBeth. Image from Curious News.
This story has been updated to remove an incorrect reference of Yashili New Zealand's Pokeno site. It was not previously owned by Synlait Milk. .