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Sky profit warning sees local shares slide

NZ Newswire logoNZ Newswire 14/12/2016 Sophie Boot

New Zealand shares dropped after Sky TV gave a profit warning, while A2 Milk Co extended its decline on uncertainty about the Chinese infant formula market.

The S&P/NZX 50 Index fell 52.34 points, or 0.8 per cent, to 6,797.87. Within the index, 28 stocks fell, 20 rose and three were unchanged. Turnover was $163 million.

Sky TV was the worst performer, down 10.8 per cent to $4.28, a one-month low. It cut its 2017 earnings guidance citing rising content costs, and falling revenue and subscribers.

Earnings before interest, tax, depreciation and amortisation for the year ending June 30, 2017, is expected to be 5 per cent to 7 per cent below the $296 million forecast it gave in June. The Commerce Commission has delayed its ruling on a proposed tie-up with Vodafone until Feb. 23.

"There are a number of question marks that have to be raised after this, it wasn't long ago that we had another series of events so definitely a few question marks there," said Shane Solly, a portfolio manager at Harbour Asset Management.

A2 Milk Co continued to drop, down 5.8 per cent to $2.13. It began declining on Monday on the news that Australian formula producer Bellamy's had gone into a trading halt on the ASX.

"There's still no news from Bellamy's, the company has been in a trading halt for three days now after saying two - that's obviously got people anxious about whether there's more issues regarding particularly the sales of infant formula," Solly said.

SkyCity declined 3.8 per cent to $3.85, Summerset Group Holdings fell 2.8 per cent to $4.50, and Freightways declined 2.2 per cent to $6.65.

ANZ was the best performer on the index, up 1.2 per cent to $31.31. Air New Zealand gained 1.2 per cent to $2.15 while New Zealand Refining Co rose 1.2 per cent to $2.58.

Outside the benchmark index, Veritas Investments was placed in a trading halt at 22 cents before announcing it will wind up its unprofitable Nosh supermarket business to keep in the good graces of its lender, ANZ Bank New Zealand. It's dropped 54 per cent this year.

Intueri Education Group shares slumped 25 per cent to a record low of 3 cents amid signs Australian investors are trimming their holdings ahead of the private education provider's delisting from the ASX next month.

Abano Healthcare gained 2 per cent to $8.15.

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