Fletcher Forests reports $249m year loss

9.20am

Fletcher Forests' appalling year continued when it revealed today its loss for the year to June was $249 million.

In the previous year, it posted a $107 million loss.

Last week, its $1.4 billion deal to purchase the Central North Island Forestry Partnership (CNI) in conjunction with China's Citic, unravelled when it failed to garner the 75 per cent requisite majority of shareholder approval.

The result was impaired by an unusual item loss of $324 million, principally relating to the write-off of the balance of the company's subordinated loan to CNI which was announced in the first half of the year. After tax the net unusual loss for the year was $249 million.

The overall company loss was marginally better than analysts had predicted.

It was on sales of $649 million, up from $622 million. It was on earnings before interest and tax of $136 million including a revaluation upwards of its forests of $53 million.

Ebit, before unusual items and the crop revaluation, totalled $83 million for the year, an increase of $66 million over the $17 million recorded last year.

Cash flow from operations for the year was strong at $56 million, increasing from $22 million in the first six months to $34 million.

Ebit before unusual items grew strongly in the second half of the financial year to $93 million, compared to $43 million recorded in the first six months of the year.

The company said its Japan Engineered Wood Products operation performed unsatisfactorily, and had been wound up.

The results were achieved on the basis of a clear-fell harvest from the company's estate of 1.59 million cubic metres.

The company said its annual harvest would increase by about 45 per cent over the next five years as forests matured, with a commensurate growth in operating earnings and cash flow.

"The strong growth in operating earnings was assisted by the benefits flowing through from the company's ongoing cost reduction programme, an excellent performance from our North American operations, and an unrealised foreign exchange gain ($25 million) as a result of the strengthening New Zealand dollar."

The value of the forest estate rose an estimated 5 per cent, to $1.176 billion.

Harvesting has been less than the biological growth on all remaining areas, giving rise to an increase in forest inventory of $51 million, the company said.

Fletcher Forests said it was now in a "very satisfactory financial position", with net debt reduced to $247 million, down $76 million from $323 million at June 30, 2001.

No dividend was declared for the year.

The board said that given the comfortable debt level, the directors were reviewing capital management options.

Net tangible assets per share were estimated at 41 cents at June 30 compared with 39.3 cents at December 31.

- NZPA