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Carter Holt Harvey in Strong Position for 2004

Carter Holt Harvey in Strong Position for 2004

Carter Holt Harvey today announced its December result, ending a solid year for the company. Operating earnings before interest and tax (EBIT) were $315 million for the year ended 31 December 2003.

This was down 5% on last year due primarily to industrial action at the Kinleith Mill and lower forest sales volumes. EBIT for the December quarter was $81 million, similar to the same period in the previous year ($82 million). This would have been $88 million but for a $7 million charge in relation to the company’s pension fund. During the December quarter CHH recorded a $918 million charge to restructuring and nonrecurring items.

This included an $876 million write-down of the company’s forests and $17 million of costs associated with the closure of its Tokoroa sawmill. This resulted in a consolidated net loss of $656 million for the year.

In June last year CHH advised shareholders of the possible non-cash write down of the company’s forests of up to $900 million from the current book value of $2.9 billion.

This reflects the erosion of log realisations in key markets.

Overview of Results by Quarter Quarters ending (NZ$ million) Dec 02 March 03 June 03 Sept 03 Dec 03 Net Sales 1,048 912 928 1,007 1,018 Operating EBIT 82 77 68 89 81 Restructuring and non-recurring items 47 - - - 918 Net Earnings 4 51 41 70 (818)

Chief Executive Officer, Peter Springford said that the annual result reflected the fact the company had faced up to some tough decisions, and was responding decisively to challenging conditions, particularly in export markets.

“I am satisfied with the company’s operating performance over the course of the year, given the challenges faced by the industry.

“Looking beyond our one-off costs, the result for the year is a solid one. We have steadily improved productivity across the business, and these efforts are offsetting the effects of higher New Zealand and Australian currencies.

“Productivity gains are being achieved in all sectors of the company. Costs in our Forests business have been significantly reduced, our Tasman facility has achieved record pulp production, Kinleith has broken five production records since the successful conclusion of last year’s changes, production capacity in our Australian wood products operations is up 5%, and our Sorbent tissue brand continues to grow, with all key indicators up on the previous year,” said Mr Springford.

A challenging year for the company in export markets was offset by a buoyant building industry on both sides of the Tasman. Projections indicate domestic markets are likely to remain strong into 2004.

“In the year ahead we will continue to focus the company around our core strengths in wood fibre processing while pushing towards world class productivity and taking advantage of any improvements in commodity prices as the global economy strengthens,” said Mr Springford.

The company’s Board of Directors declared a final dividend of NZ 3 cents per share for the year ended 31 December 2003. The dividend will not carry any tax credits and will be paid on 26 February 2004.

All figures are in New Zealand dollars.

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