INSIGHTS BLOG

WEEK IN REVIEW: 19 - 23 AUGUST

Craigs Investment Partners Research Team, 23 August 2019

The local reporting season hit its peak this week with a plethora of companies reporting results giving local investors plenty to digest.

Napier Port made its listing debut on Tuesday, only the third company in two years to list on the NZX. Cannasouth, a medical cannabis company, listed in July and Oceania Healthcare back in May 2017. Shares of the newly listed port surged 13.5% to $2.95 on its debut, having traded as high as $3.04 intraday, with more than 16.1 million shares changing hands.

The a2 Milk Company tumbled 12.1% after reporting its result despite announcing record revenue and profits, with the result falling short of market expectations and higher marketing spend next year. The milk marketer announced its plans to pull out of the UK, to focus on strengthening its position in the key regions of China and the US.

Spark jumped 4.5% after it reported a solid annual result at the top end of guidance. The country’s biggest telecommunications company announced a second half total dividend of 12.5 cents per share, bringing the total FY19 dividend to 25 cents per share, unchanged from a year earlier.

Fletcher Building rallied 3.3% after reporting net profit in-line with guidance, citing decent performance in New Zealand and tough conditions in Australia. The company said its construction division stabilised, which led to a return to profitability, and the company said it is on track to complete its remaining Building and Interior projects.

Auckland Airport released a good annual result with total passengers increasing to 21.1 million, up 2.8% on the previous year. Operating earnings increased 9.6%, slightly ahead of estimates, while underlying profit after tax was up 4.4%, in-line with expectations. Auckland Airport’s retail business was the best performer on the back of 32 new store openings. The final dividend increased 2.3% to 11.25 cents per share.

Air New Zealand announced a 31% fall in net profit after though this was ahead of company guidance. The result was driven by operating revenue growth of 5.3%, which was offset by an increase in the price of fuel, as well as a temporary increase in operating costs due to Rolls-Royce engine issues. Shareholders will receive a final dividend of 11 cents per share, taking the total ordinary dividends declared for the year to 22 cents per share, in-line with the prior year.

EBOS reported an increase in operating earnings of 4.6% while underlying net profit after tax increased 5.2% on the prior year. The company declared a final dividend declared of 37 cents per share, up 4.2% on the prior year. The company expects “significant” growth next year on the back of a major contract win with the Chemist Warehouse.

Sky TV announced a return to growth by accelerating its focus on streaming services. The Board decided not to pay an interim dividend to reflect the investment focus of the business. The company’s Chairman, Peter Macourt, also announced he will be stepping down, effective September 1 after 17 years in the role.

NZ Refining closed down 4.2% after reporting a net loss for the first half of the year. The company blamed higher electricity prices and weaker oil refining margins, which have resulted in an increase in debt levels. Shareholders will be paid an interim dividend of 2 cents per share.

In other corporate news, shares in Z Energy came under pressure after Prime Minister Jacinda Ardern said motorists have been fleeced on petrol prices for a decade and that the Government is “ready to act”. The Commerce Commission found that the fuel retailer’s profits excessive when compared to other countries, due to limited competition.

Next week reporting season will continue albeit with fewer company announcing results. We will hear from the likes of Port of Tauranga, Chorus, Tourism Holdings, Scales, Vista Group and Genesis Energy.