Westpac shares fall after missed earnings target

  • 02/05/2016
Westpac shares fall after missed earnings target

New Zealand shares fell after Westpac posted earnings that missed estimates on increased impairments. ANZ, which also reports this week, and Kathmandu Holdings were among leading decliners.

The S&P/NZX 50 Index fell 28.76 points, or 0.4 percent, to 6,791.82. Within the index, 31 stocks fell, 14 rose and four were unchanged. Turnover was $122 million.

Westpac dropped 5 percent to $32.34 and ANZ Bank fell 4.2 percent to $25.53 on the NZX, pacing declines on the S&P/ASX 200 Index.

Westpac posted first-half cash profit, which excludes one-time items, of AU$3.9 billion (NZ$4.25b). While that was up from AU$3.78b a year earlier it missed analyst estimates as the charge for bad debts surged to AU$667 million (NZ$726.07M), a six-year high.

"Yes it did miss [estimates] but not by a huge amount," says David Price, a broker at Forsyth Barr. "The Australian market is fairly brutal when companies don't make forecast."

Kathmandu fell 1.9 percent to $1.56.

Meridian Energy fell 3.6 percent to $2.555, leading declines among utility stocks, and Mighty River Power fell about 3 percent to $2.93. TrustPower fell 1.3 percent to $7.65, Vector dropped 1.2 percent to $3.31 and Contact Energy fell 0.2 percent to $5.07.

Z Energy, which last week got antitrust approval to buy rival petrol station chains, rose 0.5 percent to $7.88.

Fonterra Shareholders' Fund rose 0.3 percent to $5.83. This week's GlobalDairyTrade auction is expected to record another small gain in prices of dairy products.

Among other large-cap companies, retirement village operator Summerset Group fell 1.8 percent to $4.36 and retailer Warehouse Group declined 1.5 percent to $2.72. Xero, the cloud-based accounting service, fell 1.2 percent to $16.20 and A2 Milk fell 1.1 percent to $1.75.

Price says there has been "indiscriminate buying from offshore" of New Zealand's biggest listed companies and today's selloff was just as widespread.

Investors were also conscious of the kiwi dollar having gained back up to 70 US cents, creating an extra drag for exporters and companies getting much of their revenue offshore. Fishers & Paykel Healthcare fell 0.3 percent to $9.12.