NZX drops after Spark, THL downgrades
Tourism Holdings plunged 36 per cent and Spark nearly 5 per cent on significant earnings downgrades that rattled the New Zealand sharemarket.
The S&P/NZX 50 Index fell sharply after the early-morning announcements and never recovered, closing at 11,820.78 — down 117.3 points or 0.98 per cent.
There were 95 decliners and 47 gainers over the whole market on strong volumes of 47.27 million share transactions worth $140.04m.
Spark was down 23c or 4.87 per cent to $4.49 on trade worth $14.26m after reducing its full-year operating earnings (ebitdai) guidance to $1.17-$1.21 billion, from $1.215-1.26b “as challenging trading conditions intensified in some parts of the business”.
Spark said IT revenue has been impacted by weaker demand in the enterprise and government market which has reduced spending. Mobile service revenue and broadband performance remained in line with expectation but sales of mobile devices and accessories have softened.
Tourism Holdings was down $1.03 or 36.14 per cent to a two-year low of $1.82 on trade worth $17.2m after cutting its full-year net profit guidance by a third, from $75m to $50m-$53m.
The expanded company said the weakening economy has impacted most regions and business divisions, with campervan sales volumes and margins now declining more quickly than expected.
Tourism Holdings is talking with its banking syndicate to amend the covenant package to better reflect the current trading conditions. The company, which merged with Apollo Tourism & Leisure, has maintained the goal of achieving $100m net profit in the 2026 financial year.
Matt Goodson, managing director of Salt Funds Management, said Tourism Holdings’ interaction with its balance sheet and debt level led to the big reaction on the market.
“If it was merely a cyclical profit downgrade, then the reaction would not have been as bad. Tourism Holdings has an Australian-centric share register and they take no prisoners when there is a company downgrade,” he said.
Goodson said Spark’s share price fall was the key driver in the index’s performance. “The bulk of its downgrade came from IT services which have been weakening recently.
“This trend should not have been a total surprise and the market suggested the downgrade was a little worse than expected. Spark is keeping its dividend unchanged and the sustainability of this move will be closely watched.”
Fisher and Paykel Healthcare was up 35c to $28.90; a2 Milk gained 11c to $6.68; Mainfreight increased 51c to $69.51; and Ventia Services added 11c or 2.79 per cent to $4.05.
Westpac Bank increased 80c or 2.76 per cent to $29.80 after reporting half-year net profit of A$3.56b, down 1 per cent on the previous corresponding period, and revenue of A$10.59b, down 4 per cent.
Westpac is paying an interim dividend of 75c a share and a special dividend of 15c a share on June 25 because of surplus capital and is making a A$2.5b share buyback.
ANZ was up 30c to $31, and Heartland was down 3c or 2.88 per cent to $1.01.
Auckland International Airport, up 4c to $7.90, is launching a $200m 6.5-year fixed rate bond, with the ability to accept up to $50m oversubscriptions.
Ebos Group was down 50c to $35.50; Fletcher Building declined 12c or 3.23 per cent to $3.60; Skellerup shed 10c or 2.33 per cent to $4.29; SkyCity decreased 7c or 3.95 per cent to $1.70; and Comvita fell 12c or 6.03 per cent to $1.87.
Tower eased 2c or 2.45 per cent to 79.5c; Delegat Group was down 18c or 3 per cent to $5.82; Restaurant Brands declined 13c or 3.71 per cent to $3.37; PGG Wrightson shed 7c or 3.61 per cent to $1.87; KMD Brands decreased 2c or 3.85 per cent to 50c; and 2 Cheap Cars was down 4c or 5.06 per cent to 75c.
In the property sector, Argosy was down 2c or 1.8 per cent to $1.09; Investore declined 3c or 2.65 per cent to $1.10; and Kiwi shed 3.5c or 4.27 per cent to 78.5c.
Metro Performance Glass was down 0.004c or 4.3 per cent to 8.9c after telling the market its chief executive Simon Mander is leaving at the end of the week and will be replaced by Simon Bennett as executive director.