By LIBBY MIDDLEBROOK
Forestry company Carter Holt Harvey breezed through its third quarter with a spurt in net profit of $89 million - its largest quarterly profit in more than three years.
The October to December 31 result is a 495 per cent jump on the $15 million earned in the comparable
1998 quarter.
Chief executive Chris Liddell said the improved result reflected higher volumes of log, paper, pulp and wood products sales along with strengthening sale prices for engineered wood products, logs and basic wood products. The company's performance improvement programme Genesis had also saved it $59 million during the period.
"We've been assisted by a favourable market," he said.
Consolidated net earnings for the nine months to December 31 were $145 million, 480 per cent up on the $25 million during the same period in 1998. Net sales of $2.368 billion during the nine-month period were 13 per cent higher than 1998's $2.092 billion.
The sale of Carter Holt's Chilean business Copec for $US1.23 billion was a key event during the quarter with settlement at the end of March. Mr Liddell was reluctant to give any details about how the money would be spent, although he said some debt would be paid off in the short term. "We don't intend to be pressed to be buying any assets for the sake of it," he said.
Meanwhile, Ord Minnett forestry analyst David Shirer said while the company had posted a "better than expected" result, commodity stocks were relatively out of favour with the market due to rising interest rates and the strong US dollar.
Carter's share price fell 4c to 210c in the wake of its result.
Merrill Lynch's Simon Gresham said he expected the value of commodity stocks to pick up later in the year as companies continued to produce favourable results.
"Cyclical stocks are suffering but we think that's a temporary issue and investors' attention will turn to them later in the year."
Asked to explain the share price response, he said: "The way the market is at the moment, if you report a profit, your share price goes down, and if you're an internet company that reports a loss, your share price goes up."
