Business Wrap: Mainfreight surprisingly strong
The NZX50 is back over 10k again as Mainfreight keeps its profit forecast with just a single digit fall in sales, while Tilt Renewables' big payday helps Infratil pay a dividend
Pushing higher: The NZX50 finally managed to close above the key 10,000 level for the first time in almost a month, finishing the session at its high for the day of 10,033, a gain of 2.3 percent. Investors took heart from news that the number of daily Covid-19 infections locally continued to decline along with a trading update from market heavyweight Mainfreight that buoyed sentiment.
Aussie bank dividend fear: In Australia it was a different story with the ASX200 falling 0.9 percent to close at 5207 as worries about cuts in bank dividends left investors wary.
Helping hand: Infratil shares rose 7.2 percent to $4.30 yesterday despite an announcement that the company and Wellington City Council are preparing a loan to support Wellington Airport (one-third owned by Infratil), which has seen aircraft and passenger traffic collapse 95 percent since late March. The combined entity could provide a loan that was convertible into shares as a backstop facility for the airport, which last year earned $138 million in revenues from landing charges and rents from shops and carparks.
Infratil still paying dividend: Infratil said it estimated operating earnings for the year ended March 31 at between $550 million and $560 million, down from the $575 million to $615 million previously forecast due to accounting treatment of partial asset sales. The company also said its 11c dividend may have to be reduced.
Trucking on: Freight and logistics company Mainfreight reported that total sales revenue for the first full week of April declined 7 percent compared to the same week last year due to the restrictions of freight movements globally, while local revenues had almost halved due to the impact of Covid-19. However, while the company did manage to turn in a profit before tax across the week, it said trading results across the company’s five main regions were mixed.
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Still looking good: Mainfreight reiterated its earlier guidance that its result for the year to the end of March would be ahead of last year.
No deal: Last week it was Augusta Capital and before that it was Abano Healthcare. Yesterday it was retirement village operator Metlifecare announcing the cancellation of a $1.5 billion deal by Swedish private equity giant EQT to acquire the business at an agreed price of $7 a share.
'Material adverse change': No surprise therefore that Metlifecare shares fell sharply on the news, closing down 17.4 percent at $3.51. The takeover had been due to occur through a court sanctioned scheme of arrangement in May this year, however EQT had given notice that it was invoking the “Material Adverse Change” clause allowing termination of the deal due to the Covid-19 pandemic.
Not so fast: Metlifecare chairman Kim Ellis said the company was taking legal advice but its initial view was that the assertions are “without substance” and the would-be buyer did not have a lawful basis to terminate the deal.
What’s this? A company actually giving money back to shareholders ... Tilt Renewables surprised investors with its decision to return A$260 million to shareholders via a pro-rata buyback at a time when other companies are asking for more capital. The announcement is good news for Tilt’s two biggest shareholders Infratil and Mercury NZ, who respectively own 65.3 percent and 20 percent between them, entitling them to A$169.8 million and A$52 million from the buyback.
Too much cash: The renewable energy developer finds itself in the enviable position of being very cashed up having sold its Snowtown 2 wind farm in December, when it pocketed A$455 million. It currently has A$535 million of unrestricted cash, not including commitments for two other farms currently under construction.
Forestry scrap brewing: Forest owners will not be happy with news they may face restrictions on log export volumes under a package of measures expected to be considered by senior government ministers next week. Forestry Minister Shane Jones is proposing a levy on log exports to help fund the local industry along with the likelihood of regulations requiring exporters to demonstrate that the needs of domestic processors have been met and the establishment of a licensing regime for major exporters.
Shut down: Dairy giant Fonterra has temporarily closed its Edendale distribution centre in Southland for 48 hours to allow for deep cleaning after two workers tested positive for Covid-19. Continuing to operate during the lockdown as an essential service, Fonterra employees have been required to adhere to strict guidelines to protect themselves and the community from the virus. The co-op says the affected part of the plant where the two workers were based will be subjected to a deep clean while the rest of the site will continue to operate, and milk collection and processing will not be impacted.
Downgraded: As if things couldn’t get any worse across the Tasman following the downgrading of all four Aussie banks by ratings agency Fitch, yesterday saw rival agency S&P Global place Australia’s coveted Triple A credit rating on negative outlook, often the first step towards a ratings downgrade. S&P Global said there had been a "substantial deterioration in the nation's finances and the country faced the risk of a deep recession”.
Downside risk: As the Morrison government prepares to introduce its $130 billion JobKeeper program into the Federal Parliament, the agency said the fiscal and economic risks facing Australia were "tilted toward the downside.”.
Spending up large: On top of its JobKeeper program, the Australian government has promised more than $66 billion in spending plus billions more in loan guarantees to help businesses survive pandemic-related closedowns.
Very rich and still Number 1: It seems not even a mere $40 billion divorce can knock Amazon founder and CEO Jeff Bezos off his perch as the world's richest person. For the third year in a row, Bezos holds on to top spot in the Forbes' rank of global billionaires. While his net worth fell $US18 billion last year to $US113 billion, according to Forbes, partially due to his high-profile split from his former wife MacKenzie Bezos (who has made her debut appearance on the list, thanks to the divorce settlement). As part of the settlement, she got 25 percent of the couple's Amazon stock. She now ranks 22nd on Forbes' list.
127th richest: Local rich lister Graeme Hart appears at number 127 on the list with a net worth of $US10.5 billion.
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