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NZX falls as Air NZ dips on gloomy outlook

NZ NewswireNZ Newswire 26/08/2016 Paul McBeth

New Zealand shares fell as Air New Zealand declined after warning its record profit might not be repeated and investors cashed in recent gains in an earnings season where companies have responded to increasing demand for yield with bigger dividend payments.

Sky TV gained after beating earnings expectations.

The S&P/NZX 50 Index declined 35.98, or 0.5 per cent, to 7391.3. Within the index 28 stocks fell, 17 rose and six were unchanged. Turnover was $160 million.

Air New Zealand fell 0.5 per cent to $2.22 after the national carrier reported a record profit and declared a special dividend, though warned cheap fuel and the country's tourism boom was attracting more foreign carriers which would weigh on the company's earnings in 2017.

"That looks to be showing the business is under pressure from a lot of competition around in the market," said James Lindsay, who helps manage $400m of NZ equities at Nikko Asset Management.

A2 Milk Co led the market lower, falling 3.3 per cent to $2.05 after reporting a return to profit earlier this week, while Metlifecare dropped 3 per cent to $6.08.

Nikko's Lindsay said the benchmark index had been near record highs with New Zealand's relatively strong economy attracting investors in search of yield.

Sky TV rose 2.8 per cent to $4.82 after the pay-TV operator posted a profit of $147.1m, which included one-off costs associated with a planned merger with Vodafone New Zealand, while managing to increase subscriber numbers to 852,679.

Port of Tauranga rose 1.5 per cent to $19.65, Vital Healthcare Property Trust gained 1.32 per cent to $2.31 and Tegel Group increased 1.2 per cent to $1.76.

Fletcher Building declined 0.9 per cent to $10.49 and Spark New Zealand increased 0.6 per cent to $3.925.

Outside the benchmark index, CBL Corp gained 2.8 per cent to $2.90, while Vista Group International fell 7.5 per cent to $6.20.

NZME gained 1.2 per cent to 83 cents after announcing it had increased first-half earnings 0.5 per cent as it stripped out costs faster than advertising revenue declined.

Delegat Group was unchanged at $6.10 after the winemaker increased its annual dividend after confirming a record operating profit, while Seeka Kiwifruit Industries was unchanged at $4.50.

Cavalier Corp gained 1.1 per cent to 89 cents and Marsden Maritime Holdings was unchanged at $3.30.

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