Ebos boss resigns; NZ Windfarms in take over
The New Zealand sharemarket ended slightly weaker despite investors taking comfort from the Reserve Bank’s 50-basis-point cut in its official cash rate and the prospects of still lower rates later this year.
Wednesday, February 19th 2025, 6:58PM
by BusinessDesk
The S&P/NZX 50 Index closed at 13,033.36, down 17.76 points or 0.14%.
There were 73 gainers and 56 decliners over the whole market, with 37.4 million shares worth $166.7m changing hands.
The Reserve Bank of NZ’s (RBNZ) cut to 3.75% came as no surprise to the market as it was well anticipated, but the big news was in the bank’s forecast track, which implies two quarter-point rate cuts in April and May.
Dovish outlook
The bank now sees the official cash rate (OCR) settling at 3.1% at the end of this year, having previously forecast that to happen in March 2027.
The main beneficiary of better news on the interest rate front was the highly cyclical Fletcher Building, which rallied by 16c or 5% to $3.35 despite reporting a poor result.
The company said it had gone through a challenging period and tough trading conditions to report a $134m net first-half loss (from a loss of $120m in the previous comparable period).
Greg Smith, head of retail at Devon Funds Management, said the RBNZ’s message was dovish.
“There are a lot of businesses that are struggling in the current environment, but there are some bright spots, such as dairy and the export sector,” Smith said.
“Fletcher Building is a cyclical business so there is some hope there that they are at the bottom of the cycle.
“It was a pretty dire result, but it was not more dire than people were expecting,” Smith said. “They should do better as the economy turns around.”
Vulcan Steel, another highly cyclical stock, ended 32c or 3.76% higher at $8.82.
Ebos departure
Medical supplies distributor Ebos dropped $2.07 (2.9%) to $40.00 after reporting that its underlying earnings before interest, tax, depreciation and amortisation (Ebitda) rose 7.1% to A$291m (NZ$323.7m) in the first half.
The dual-listed Ebos then surprised the market by announcing that John Cullity would retire as chief executive to be replaced by Adam Hall on July 1.
Hall has been the group executive and president of Asia for Orica, with experience in mergers and acquisitions.
Devon’s Smith said the Ebos result was “solid enough”.
“But the big surprise there was the CEO leaving, to be replaced by someone whose background is Orica, which is involved in explosives.”
Ebos reiterated its guidance that the group expects to generate underlying ebitda between A$575m-A$600m in 2025.
The company continued exploring an “active pipeline” of M&A opportunities.
Turners Automotive continued its run higher, gaining 16c or 2.7% after issuing an upbeat earnings forecast earlier in the week.
Fonterra units, which give farming and non-farming investors access to the co-op’s dividend, ended 3c higher at $5.09.
The co-op earlier updated the market on its plan to sell its Consumer business and integrated businesses, Fonterra Oceania and Sri Lanka.
Fonterra is pursuing a trade sale and initial public offering (IPO) as potential divestment options.
“Obviously, that sector has been tracking fairly well, and the good news continues to flow from that,” Devon’s Smith said.
Meridian Energy ended steady at $6.00 after announcing that it planned to take over New Zealand Windfarms via a scheme of implementation agreement pitched at 25c a share, for a total outlay of $91m.
NZ Windfarms shot up by 10.4c (86%) to 22.5c on the news
a2 Milk eased 2c to$8.10 after putting in a big gain, post-result, on Monday.
The company’s closely-allied Synlait Milk edged back 5c to 97c after it tool put on a strong run after a2’s result.
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