Fletcher Forests posts $302 million half-year loss

10.30 am

Fletcher Forests today posted a net after tax loss of $302 million for the half year ending December 31.

No interim dividend will be paid.

The result, which compares with a $22 million profit for the same period a year earlier, was hit by the write-off of the balance of a $349 million loan relating to Forests' failed Central North Island Forest Partnership (CNI).

Unusual items, including that write-off, totalled $323 million after tax -- turning what was a net $21 million profit into a $302 million loss.

Forests' head and preference shares both slipped a cent to 25c following the results announcement.

Today's result was based on earnings before interest and tax (ebit) of $41 million -- a strong improvement on the $8 million figure posted in the June half year.

This earnings turnaround reflected the company's focus on reducing the cost of doing business and was achieved despite a weak global economic environment, Forests said in a statement.

The result was buoyed by a modest improvement in log and manufactured product prices assisted by higher sales.

Manufactured product and forest estate log sales volumes increased by 10 per cent and 8 per cent respectively during the period, compared with the previous six months.

Today's result announcement had been set back from February 14 in the hope Forests would be able to reveal the outcome of the CNI sale, but that was yet to be concluded, the company said.

The CNI partnership, jointly owned by Fletcher Forests and China's Citic, collapsed in February last year with receivers appointed by a syndicate of banks owed more than $US637 million ($NZ1.5 billion).

Forests continues to manage the 180,000ha estate.

The sale is being handled by Michael Stiassny of receiver Ferrier Hodgson, in conjunction with investment bank Morgan Stanley.

Forests said in December it had submitted a proposal for CNI involving a third party and did not contemplate raising additional equity capital.

Fellow forest products company Carter Holt Harvey Ltd has sought and been granted anti-trust approval to buy the estate, while Citic and US-based Hancock Timber Resources are also said to have put in bids.

Fletcher Forests, Citic and the former Brierley Investments (now BIL International) bought the estate from the Government for $NZ2.25 billion in 1996.

- NZPA