Carter Holt reports $25m profit

Wood processor Carter Holt Harvey today posted a March quarter core net profit of $25 million, against $43 million last year.

The total profit for the three months to March 31 was boosted by a $65m revaluation of its forests, bringing it to $90m.

The comparable figure of $120m last year was boosted by a $68m revaluation of the firm's forests and a $9m one-off profit from the sale of its tissue business.

CHH has changed its accounting system to meet international financial standards.

The result came on revenues of $748m, against $770m in the March 2004 quarter.

Chief executive Peter Springford said although the result for the three months to March 31 was consistent with the firm's expectations and forecasts, more work was needed to improve shareholder returns.

"Carter Holt Harvey has a clear strategy, a sound financial position and we are strongly focused on delivering improved future returns," Mr Springford said in a statement to NZX.

Market conditions during the quarter had been challenging, but CHH had reshaped its business and was "building scale" in areas where it had a competitive advantage

CHH's operating profit for the March quarter was $49m, against $77m in the previous same period. The firm last month forecast an operating profit of $45m to $50m for the quarter.

Its financial statements showed a $31m gain from currency hedging, against $40m a year earlier.

Earnings per share in the quarter were 6.9c, up from 6.4c a year earlier.

Net debt to total capitalisation was 14.6 per cent, from 20.2 per cent.

Mr Springford said CHH's first quarter result was influenced by the Australian building and construction market.

The three months to March 31 were traditionally slowest for CHH's wood products business, he said.

CHH, which is 51 per cent owned by International Paper Co, was "seeing the impacts of additional timber capacity and a softening in new housing starts in Australia."

These factors were directly influencing local demand and price, Mr Springford in the statement.

"However the company remains strongly focused on delivering productivity and efficiency improvements across its wood products operations and continues to have confidence in the Australian market in the long term", he said.

CHH had continued to improve its pulp operations in New Zealand with a $37m capital upgrade programme to the Tasman mill planned over the next two years.

"We continue to build on our core areas of strength. The recent successful acquisitions of PTP in China and Wadepack in Australia are also both performing in line with our expectations and providing a positive earnings contribution." Mr Springford said.

CHH shares closed at $1.90 each yesterday, having ranged between $1.85 and $2.64 in the past year.

- NZPA