Carter Holt posts sharply higher operating surplus

10.40am

Carter Holt Harvey today today reported a December year operating surplus after tax of $137 million compared with $25 million in 2001.

Total operating revenue rose 1.0 per cent to $4.143 billion.

The result included unusual losses of $64 million.

Earnings per share rose to 7.9 cents from 1.5 cents and the company announced an unchanged final dividend of 3cps.

The dividend will be paid on March 3 for those registered on February 14.

Operating earnings before interest and tax rose to $333 million from $166 million and the pre-tax operating surplus rose to $145 million from a loss of $5 million.

Carter Holt had net earnings of just $4 million for the December quarter compared with $60 million in the September quarter and $25 million in the December 2001 quarter.

The main reason for this was a $47 million charge to restructuring and non-recurring taken this December quarter, due primarily to the Kinleith restructuring process and early repayment of bonds.

Carter Holt provided tax of just $1 million for 2002 compared with a rebate of $40 million the previous year.

December quarter's raw operating earnings were described as a "a good result at $82 million, given the normal impact of the holiday season and low pulp prices".

New chief executive Peter Springford said the "strong" full year result reflected improved operational performances across the board, higher realisations for logs, and the buoyant housing market.

"Our 2002 operating result is good progress. It reflects our excellent regional market positions and the hard work that is going into ensuring international competitiveness. This focus will continue in 2003."

Strong cash flows from operations, reduced capital expenditure and working capital had resulted in a strong balance sheet. The company's net debt to total capitalisation was now 19 per cent, described as "a great position to be in given mixed indicators for global markets".

During the year the company reduced health and safety incidents by 15 per cent.

The Forests division recorded earnings before interest and tax (ebit) of $133 million for the year against $62 million in 2001 on sales of $673 million compared with $637 million.

Increased sales volumes, favourable export prices and reduced harvesting and distribution costs were the main drivers behind the division's improvement. It was buoyed by strong residential construction activity in Australia and New Zealand.

South Korea was remained the largest export market accounting for 50 per cent of the export volumes but volumes fell 20 per cent.

However increased demand from China and India compensated for the Korean reduction and CHH sees continued good demand there.

Ebit for the Wood Products division rose to $96 million from $26 million last year on sales of $1.757 billion compared with $1,524 million in 2001.

The division enjoyed a much stronger residential housing market in Australia and New Zealand compared to 2001 with higher volumes and prices.

The Pulp and Paper division recorded ebit of $26 million for 2002 compared with $11 million for the same period last year. Sales for the year were $735 million, compared to $818 million last year.

The division was dragged down by the Kinleith mill which recorded its worst annual operating ebit loss since the 31 March 1999 financial year.

Last year, the company announced its plan to restructure the Kinleith mill and that move is aimed at making Kinleith internationally competitive.

"This is vital given that 97 per cent of Kinleith's market pulp production and 60 per cent of its paper production are exported to Asian markets."

Total production at the mill was a record 532,000 tonnes, up 3 per cent on 2001 production levels.

The Tissue division had ebit earnings of $51 million for the year, up $11 million on the $40 million earned in 2001, on steady sales of $791 million.

Packaging's ebit rose to $27 million from $18 million in 2001 on slightly lower sales of $526 million.

Carter Holt shares were down 2 cents to $1.76 shortly after the result.

- NZPA