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CHH solid half year despite Kinleith ind action

Carter Holt Harvey reports solid half year despite Kinleith industrial action

Carter Holt Harvey was pleased to advise shareholders today that net earnings for the six months ended 30 June 2003 were up 26% at $92 million, compared to $73 million for the same period last year.

Overview of Results Half Year ended ($NZm) 30 June 2003 30 June 2002
Net sales $1,840m (03) $2,005m (02)
Operating earnings before interest and tax (EBIT) $145m (03) $143m (02)
Net earnings $92m (03) $73m (02)

For the June quarter, consolidated net earnings were $41 million compared to $56 million for the June quarter last year. Operating EBIT was $68 million, down $24 million on the same quarter last year. Net sales were $928 million compared to $1,045 million.

Chief Executive Officer, Peter Springford, said the industrial action at its Kinleith pulp and paper business and the time needed to restart production had impacted earnings for the full quarter.

“The other main factors affecting the company in the second quarter were weaker export realisations and the flow on effects into domestic markets for logs and wood products. On the positive side the housing markets continue to be strong and Kinleith is back to full production.”

“The company is looking ahead and has plans in place to ensure earnings stability. A major productivity review was undertaken earlier in the year to further our drive toward being world class in all areas of our business. It looked at revenue and cost opportunities as well as our use of capital.

“I’m confident that we can take the necessary steps to compensate for a sustained high New Zealand dollar next year,” said Mr Springford

Peter Springford also advised shareholders that initial work on the annual valuation of its forest assets indicated that it may be appropriate to restate the value with a non-cash write down of up to NZ$900 million.

“We’re concerned that, if sustained, the appreciation in the New Zealand dollar and the higher international freight rates experienced in the first half of 2003 might indicate our forests assets are overvalued.”

“We need to see if current conditions will be sustained without offsetting price increases, and to evaluate what compensating initiatives we can implement – for example cost reduction and wood-flow management.”

“We will do this as we undertake our annual valuation process which is underway and will be completed in the fourth quarter.”

Mr Springford said that overall the result for the half year was satisfactory.

“Given the events in the first half of the year, the result is a solid one. I believe we have the right platform in place to be an internationally competitive business going forward.”

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