NZ's market flat as Ebos impresses market and Spark disappoints

The local market was flat today as investors picked over a cash rate hike by the Reserve Bank of New Zealand (RBNZ), more half-year results and Russia’s president Vladimir Putin's threats to suspend Russia’s observation of a nuclear weapons reduction treaty.

Wednesday, February 22nd 2023, 6:14PM

by BusinessDesk

The RBNZ lifted the official cash rate (OCR) by a widely expected 50 basis points to 4.75% this afternoon and said it was too early to assess the impact of Cyclone Gabrielle and other recent severe weather events.

The S&P/NZX 50 Index fell 7.3 points, or 0.06%, to 11,794.22. Turnover was $147.4 million.

Mark Lister, an investment director from Craigs Investment Partners, said the market had expected the 50bp hike. Rates were likely to go higher before they started softening further down the line this year, he said, with the larger focus now on how NZ’s economy was going to recover from recent disasters.

“I feel sorry for the Reserve Bank as people are looking for answers from them and they're just not in a position to have all of the answers just yet because it's still early days,” he said.

On the earnings front today, residential land developer Winton Land delivered after-tax profits of $34.5m for the six months to December which was up from $1.3m from the previous period.

Winton was up 1.6% to $1.93 at market close. Precinct Properties which reports its half-year result tomorrow, rose 3.7% to $1.26.

Telco Spark also released its half-year results today and said net profit for the six months to Dec 31 was $837m.

Earnings before interest, taxes, depreciation, amortisation and investments (Ebitdai) was $1.04b, up a whopping 93.7% due to the sale of its tower network.

“Some parts of the business were weaker than expectations,” Lister told BusinessDesk. “The mobile part was strong but the broadband earnings were a little bit weaker than expected.”

Spark fell 5.1% to $5.01 by early evening.

Healthcare company Ebos on the other hand had a much better half-year result, lifting its first-half profit by 30%.

Ebos’ net profit for the six months ended December rose to A$132.2m (NZ$145.899m) from A$101.9m in the same six months a year earlier.

Revenue was up 17% to A$6.1 billion while the underlying earnings before interest, tax, depreciation and amortisation (Ebitda) rose 39.3% to A$289.3m.

Lister said Ebos’ earnings were the “standout” result of the day and a general reflection of what investors had come to expect from the firm.

“The business is in very good shape,” he said. “Very solid and tracking very well.”

The company jumped 3.3% to $44.45.

Communications company Vital Limited fell 4.8% to 30 cents after reporting a $190,000 net loss for the first half of the 2023 financial year. The firm had also recorded an $800,000 loss in the previous corresponding period.

Investors are preparing for a shower of earnings being released to the market tomorrow.

The major companies include Air NZ and Auckland International Airport (AIA).

Today, AIA was down 0.4% to $8.58 and Air NZ was also down 1.2% to 80.5 cents.

Tourism Holdings also announces its first half tomorrow morning and fell 2.9% to $3.75 today.

The tourism operator told the market last week it expected a higher profit thanks to its merger with Apollo Tourism & Leisure.

On the agricultural front, Scales has its half-year earnings out and NZ’s biggest kiwifruit grower Seeka will be announcing its full-year result. Scales was down 2.8% to $3.13 and Seeka fell 3% to $3.10 by this evening. The market was likely factoring in updates on storm damage.

Today, the NZ dollar was trading at 62.34 US cents at 3pm in Wellington, down from 62.50 cents yesterday.

Tags: Market Close