Market close: Utilities sector drags NZ stock market down

“There may be subtle changes in the wording of the acceleration of interest rate cuts – from August next year to February or November this year.

“The Federal Reserve will be cautious and not give the market too much hope, but leaving the OCR unchanged until August of next year is a bit too optimistic given the current economic environment,” Sullivan said.

Synlait Milk gained 0.005c or 2.04% to 25c ahead of a special meeting on Thursday to approve a $130m loan from Bright Dairy, which owns a 39.01% stake. The shareholder loan will repay a bank debt due on July 15.

Synlait informed the market that it had spoken to another significant shareholder, a2 Milk, which did not say how it would vote on the resolution of the special general meeting.

George Adams, chairman of Synlait, said it was particularly important that everyone cast their vote because the future of the company was at stake and failure to approve the loan would limit the board’s options.

Sullivan said Synlait appeared to have won over bankers and every vote counted. The meeting would be closely watched and its outcome would affect shareholders, bondholders and the rural sector as a whole.

The local market was weighed down by the utilities sector, which fell 2.26% on the NZX.

Contact Energy fell 37c or 4.04% to $8.78 after telling the market its 174MW Tauhara geothermal power station near Taupo was in the final stages of commissioning. The plant will initially operate at 152MW until its first planned power outage in October next year, when modifications will be made to bring it up to full capacity.

The 51.4MW Te Huka 3 power station will be operational in the fourth quarter of this year, at the same time Contact will make a final investment decision on the new 100MW2 binary power station to replace the Wairakei A&B geothermal power station.

Contact is forecasting operating profit (ebitdaf) of $770 million for fiscal year 2025, up from its current full-year guidance of $620 million. The company also expects to increase its annual dividend by 4 cents to 39 cents a share by the middle of next year.

Sullivan said there would be no further dividend increase until Wairakei Station was replaced, with completion expected in mid-2027, and the move had spillover effects across the rest of the sector.

“Energy stocks have strong cash flow and are good, reliable dividend payers. It makes sense for Contact to hold cash for the Wairakei project, but investors like regular increased dividends,” he said.

Mercury shares fell 19 cents, or 2.79 per cent, to $6.61; Meridian Energy shares fell 4 cents, to $6.51; Genesis shares lost 4.5 cents, or 2.02 per cent, to $2.185; and Manawa shares lost 5 cents, to $4.14.

In the retail sector, Briscoe Group shares rose 19 cents, or 4.77 per cent, to $4.17; Michael Hill shares rose 5 cents, or 10 per cent, to 55 cents; and Hallenstein Glasson shares fell 10 cents, or 1.81 per cent, to $5.43.

Sky TV shares fell 6 cents, or 2.41 per cent, to $2.43; Eroad fell 7 cents, or 5.6 per cent, to $1.18; CDL Investments fell 2 cents, or 2.74 per cent, to 71 cents; Restaurant Brands lost 9 cents, or 3.27 per cent, to $2.66; Colonial Motor fell 32 cents, or 4.74 per cent, to $6.43; and Enprise fell 1.5 cents, or 3.66 per cent, to 39.5 cents.

Ebos Group shares rose 76 cents, or 2.37 per cent, to $32.80; Ryman Healthcare shares rose 8 cents, or 2.34 per cent, to $3.50; Fletcher Building shares gained 5 cents, or $2.90; Gentrack shares rose 40 cents, or 3.88 per cent, to $10.70; and PGG Wrightson shares rose 90 cents, or 4.59 per cent, to $2.05.

Tourism Holdings shares rose 5c, or 2.7 per cent, to $1.90; South Port NZ shares rose 14c, or 2.43 per cent, to $5.90; NZME shares rose 2c, or 2.13 per cent, to 96c; Green Cross Health shares rose 2c, or 2.67 per cent, to 77c; and Comvita shares rose 2c, or 1.83 per cent, to $1.11.

TruScreen, up 0.001c or 5.88% to 18c, posted its first sale in Vietnam after an order from its distributor Gorton Health Services for 10 cervical cancer screening devices and 1,800 disposable sensors worth $100,000. Gorton aims to sell to 64 hospitals in Vietnam.