The New Zealand stock market fell on Friday after the biggest listed company Telecom reported a 15-per-cent drop in annual profit as it faced increasing competition and rising costs, the dpa reported.
Telecom shares quickly dropped more than 8 per cent after it posted an annual profit of 713 million New Zealand dollars (about 513 million US dollars), down from 844 million New Zealand dollars the previous year.
The fall in Telecom's share price pulled the market's benchmark index of top 50 stocks down more than 1.6 per cent. But both showed signs of recovery after an hour of trading, with Telecom 6.5 per cent lower and the index 1.2 per cent down.
The company reported a 30-per-cent drop in its fourth-quarter net profit to 176 million New Zealand dollars and announced a quarterly dividend of 8 cents a share, down from 14.5 cents for the same period last.
Chief executive Paul Reynolds said the annual results highlighted the increasingly competitive nature of the New Zealand telecommunications landscape.
He said it was a good result in a period of profound change as Telecom implemented a government-enforced three way operational separation.
Earnings before interest, tax, depreciation and amortisation fell 4 per cent to 1.89 billion New Zealand dollars and Telecom said this was expected to fall a further 4 to 6 per cent in the year to June 2009.
That is in line with market guidance given in April when it said earnings would also fall in 2009 and 2010 with telephone calling and internet prices held steady while costs climbed as it built new broadband and mobile phone networks.
The company predicted a return to earnings growth in 2011 as costs and capital expenditure fell.