Forestry gathering a lumbering affair

Peter Springford. Picture / Fotopress

Squibs do not come much damper.

More than 200 people turned up for forestry and wood products company Carter Holt Harvey's annual meeting yesterday at a Manukau events centre.

Nobody could say the sharemarket's fifth-largest listed company - capitalisation $2.3 billion - had failed to offer up a few topics with the potential for fireworks: the "weak wood" prosecution, forest estate sell-off plans and a soggy share price.

But it was as if someone had slipped sedatives to the assembled.

The voices of the usual suspects - shareholder activists such as Bruce Sheppard, Oliver Saint and Max Gunn - were missing from the 50-minute meeting and just three shareholders offered a question each.

In summary, their questions and answers were:

Q: Why doesn't Carter Holt list in the United States?

A: Investors can already buy into parent company International Paper and listing costs could outweigh benefits.

Q: What efforts are being made to attract institutional investors in Australia?

A: Visits, roadshows, and presentations - but failing to feature in Australian stock indices is a problem.

Q: Why can other owners get better annual returns from forests than Carter Holt's 3 per cent?

A: United States timber funds have lower costs of capital, longer investment horizons.

Sheppard later claimed: "The reason they had a peaceful meeting is that everyone has given up on Carter Holt."

Chairman John Maasland tackled Business Herald columnist Brian Gaynor's criticism of an increase, from 810 to 891, in the number of employees earning more than $100,000, disclosed in the most recent annual report.

Maasland said the figures included people overseas whose salaries were pushed into that band by exchange rates and "a significant number" who got there because of redundancy payments.

"When these distortions are removed, the number of people earning $100,00 or more has actually been falling year-on-year."

In his speech, Maasland said the share price - unchanged yesterday at $1.79 - was "simply not high enough" and the company was "significantly undervalued".

Chief executive Peter Springford said the rest of 2005 would be "challenging".

He said the company should hit the top end of analysts' expectations of $230 million to $300 million of operating profit for the full year - but only if three assumptions were correct. These were:

* The dollar averaged about 70USc to the greenback.

* Pulp prices stayed near last year's average of US$550 ($775) a tonne.

* 150,000 houses were built in Australia (versus last year's 167,000).

Other issues raised by the company included the forestry industry's absence from negotiations on free trade and tariff reductions.

Maasland said that it should be "at the forefront".