Fresh signs of stress are emerging in the finance company sector with two listed companies suffering sharp sell-offs yesterday as the credit crunch shuts down options for firms reliant on the domestic debenture market.
Shares in Dorchester Pacific, which last week downgraded its profit guidance, fell as much 23 per cent, ending the day 13c lower at 66c. Shares in New Zealand Finance were down 25 per cent at one point but recovered to close 5c lower at 55c. A year ago, Dorchester shares were trading at $2.32 while New Zealand Finance’s were at $1.50.
On Friday, Dorchester told the market its annual profit was likely to be between $3 million and $4 million against $6 million last year due to reduced lending volumes, lower fee income and increased provisioning.