Wood products company Carter Holt Harvey today warned its full year profit may fall up to 10 per cent short of previous forecasts after an expected price recovery failed to materialise.
"The impact of a continuation of prices and foreign exchange rates at or around current levels for the rest
of the year implies that earnings may be down by approximately $25-30 million versus the company's previous forecast of $283 million," CHH said.
CHH said prices in the third quarter -- rather than recovering, as expected -- have hit a low point for the year.
Bleached Kraft pulp prices are currently US$480 ($685.42) per tonne, Kraft Linerboard prices are at US$425 per tonne, and average Australian timber prices are about A$350 ($387) per cubic metre.
CHH also warned fourth quarter earnings would be $5m lower following the recent sale of a third of its forestry assets.
In July, CHH agreed to sell 94,300ha of forests to a consortium comprising of Rayonier Inc and RREEF Infrastructure, the global infrastructure arm or Deutsche Asset Management, for $435 million.
CHH will retain about 220,000ha of forests after the sale, expected to be completed in early October.
CHH is currently the subject of a $2.50 per share full takeover offer by billionaire businessman Graeme Hart's Rank Group.
The company said today it was working urgently plans to mitigate the impact of the adverse price movements.
"The current market dynamics have proven difficult to predict and because of this uncertainty and the takeover process, the directors have decided that it is important to keep the market fully informed," CHH said.
Today's profit warning is the second in recent months. In July it reduced its forecast by 6 per cent from $300m.
CHH reported a net profit of $139m for the first half ending June 30.
Shares in CHH dipped 3c to $2.50 in early trading, against a year high of $2.62 and a low of $1.68.
- NZPA
