Rocky day on sharemarket
Cyclical stock Vulcan Steel kicked off the reporting season on a disappointing note by slashing its half-year dividend on a sharp fall in earnings, while the New Zealand sharemarket posted a small gain.
Tuesday, February 11th 2025, 7:08PM
by BusinessDesk
The S&P/NZX 50 Index had a rocky day after reaching a low of 12,860.6 but closed at 12,917.45, up 41.1 points or 0.32%.
Volumes were solid, with 27.5 million shares worth $111.63m changing hands.
'More mediocre results'
Vulcan Steel was still up 30c or 3.95% to $7.90 after reporting a 64.8% slump in net profit to $9.2m and a 12.6% fall in revenue to $493m for the six months ending December but had a brighter outlook.
Vulcan told the market that trading was variable and challenging, with customers facing restrictive interest rates and weaker markets in NZ and Australia.
The steel processor and distributor will pay an interim dividend of 2.5c a share on March 27, down from 12c in the previous period. Sales volume was down 8.3% to 109,217 tonnes, while active customers were steady at 22,612.
Vulcan achieved a 10% return on capital, and net bank debt decreased $34.3m to $241.5m by the end of December. Vulcan expects trading volumes to start recovering in the second or third quarter this year – with lower interest rates boosting confidence for the future.
Mark Lister, investment director with Craigs Investment Partners, said the market was expecting a subdued result from Vulcan, but it was more upbeat about the next 12 months.
“I think Vulcan has set the tone for the reporting season,” he said. “You will see more mediocre results but glimpses of optimism for the year ahead in the companies’ outlook statements.
Lister said markets will closely follow Federal Reserve chair Jerome Powell’s testimony to the US Senate Banking Committee and the release of the Consumer and Producer Price indices this week.
“The market is interested in Powell’s take on the impact of tariffs, where inflation is at and what the Fed will do.”
Consumer inflation expectation has become anchored around the 3% level, higher than the central bank’s 2% target.
Wall Street had a strong day despite President Trump slapping 25% tariffs on steel and aluminium imports, with Australia exempted because of its trade surplus with the US. Trump also signalled additional tariffs on automobiles, pharmaceuticals and computer chips.
Commentators said that while tariffs threaten US market stability, investors are largely brushing off the trade war rhetoric, though a tit-for-tat spat is still in place. China announced US$14 billion (NZ$24.8b) in tariffs on US-made goods, while the US has put a 10% tariff on Chinese imported goods.
The Dow Jones Industrial Average was up 0.38% to 44,470.41 points; S&P 500 gained 0.67% to 6,066.44; and Nasdaq Composite increased 0.98% to 19.714.27.
Other stocks
Back home, insurer Tower increased 5c or 3.61% to $1.435 after reporting improved trading in the first quarter ending December, with gross written premiums rising 6% to $155m – average premiums reduced year-on-year due to lower inflation and increased volume in lower risk assets.
The business-as-usual claims ratio decreased to 39%, from 57% compared with the previous corresponding period, and the management expense ratio was reduced to 30%, from 32%.
Tower told shareholders at the annual meeting that the NZ business grew by 8,000 policies, mainly house and contents, and overall customer numbers increased by 5,000 to 310,000 from the end of September.
Tower is returning $45m to shareholders in early April by cancelling one in every 10 shares held at $1.1858 per share.
Meridian Energy was up 7.5c to $5.975; Ebos Group gained 39c to $42.05, Auckland International Airport added 7c to $8.75; Port of Tauranga collected 6c to $6.51; Ryman Healthcare was up 7c to $4.37; and Steel & Tube improved 3c or 3.61% to 86c.
Vector was up 9c or 2.33% to $3.96; Synlait Milk gained 2c or 3.23% to 64c; Move Logistics increased 2c or 9.09% to 24c; Eroad added 2c or 1.87% to $1.09; and Santana Minerals rose 4c or 6.45% to 66c.
Gentrack fell 54c or 4.14% to $12.50; Heartland Group decreased 2c or 1.82% to $1.08; Bremworth declined 4c or 7.41% to 50c; and Blackpearl Group shed 4c or 5.41% to 70c.
Amongst other decliners, Napier Port was down 6c or 2.21% to $2.65; NZX decreased 4c or 2.61% to $1.49; and Sky TV shed 7c or 2.62% to $2.60.
Argosy Property, up 0.005c to $1.015, has signed new tenants for two 6 Green Star buildings in Onehunga and Mt Richmond – Bascik Transport on a 12-year lease with annual rental of $1.77m, and global healthcare company Viatris for a 10-year lease with annual rent of $1.88m.
| « NZ sharemarket starts week down 0.2% | Energy stocks dominate trade on the NZX » |
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