Carter Holt chief frustrated by share price

Carter Holt Harvey shares fell 2 cents to $1.76 after announcing its 2002 result today and new chief executive Peter Springford admitted to some frustration at the seemingly intractable price.

"We are all very, very disappointed in the share price," he told NZPA after the company posted a much improved December year net profit of $137 million compared with $25 million in 2001.

Net earnings were hit by one-off costs of $64 million compared with $38 million, mostly from restructuring charges, and Mr Springford, who took over this year from Chris Liddell, admitted there was likely to more restructuring ahead.

The company has been locked in a battle with employees at its giant Kinleith mill at Tokoroa which had its worst result in four years.

"This is stage one. We have more places to go. We need to get cultural change," said Mr Springford.

"It's not all over at Kinleith. There is a lot more to do. You will see more activity at that site in the future," he promised.

The workforce there has been cut to 430 from 750 with many of the jobs outsourced. There have been strikes and court battles.

Despite CHH's huge and constant efforts to cut costs, its share price has, apart from two months in mid-2000, been stuck between $1.50 and $2.00 for more than two years.

Every division including pulp and paper posted improved ebit (earnings before interest and tax) results in 2002.

"If we continue to deliver results and deliver on our promises then the share price will follow that. That's the best that I can do -- get the right results for the shareholders," an exasperated Mr Springford said.

He does not expect any great improvement in commodity prices this year to boost the share price.

Pulp and log prices came off in the December quarter but some of the pulp price losses have since been recouped..

"I don't say I'm excited about the potential of price, but I don't think it is going to be a hell of a lot different on average from what we saw in 2002."

The buoyant Australasian markets will prop up the wood products division. New Zealand looks sustainable while Australia may soften although there is pent up demand there that should ensure a solid result.

However, overall efficiency gains will be destroyed by the rising New Zealand dollar, which is up almost one third against the US dollar since the start of last year.

CHH is fully hedged for this financial year but will then begin to feel the pain.

Mr Springford does not expect a war in Iraq to severely affect the company whose main markets are in Asia, and Australasia.

He is pessimistic about the prospect of any new pulp capacity being built in New Zealand even should CHH succeed in establishing an internationally competitive cost structure at Kinleith.

While the wood fibre will be available, obstacles remain in the form of the Resource Management Act, Employment Relations Act and uncertain energy prices.

"I don't think anyone would be wanting to make new commitments or new pulp mills until we have some certainty on the future of our energy supply and the cost of that energy."

Despite Fletcher Forests opting not to join CHH and the receiver of the Central North Island Forestry Partnership (CNI) in jointly marketing New Zealand log products overseas, Mr Springford is optimistic of improved sales and margins resulting. CHH has no intention of trying to buy CNI.

Asked how he expected to lead CHH differently from Mr Liddell, who has been promoted to chief financial officer at CHH's half owner International Paper, Mr Springford struggled.

"The strategy is not changing," he said. His focus would be on "the people environment", pushing for world class cost structures and developing new markets and products particularly in Asia where "I have some background and expertise".

Mr Springford, 48, a former Fletcher Challenge manager and one-time head of CHH's wood products business, had been based in Hong Kong where he was been spearheading IP's push into China.

- NZPA