Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Tenon forecasts first cash returns in a decade

Tenon forecasts first cash returns in a decade as US housing upturn strengthens

By Pattrick Smellie

Feb 20 (BusinessDesk) – Wood mouldings manufacturer Tenon expects to resume cash returns to shareholders in the second half of the current financial year after achieving a long-sought end to years of losses.

Tenon broke even on a net basis in the six months to Dec. 31 as the North American housing market starts to recover, the Taupo-based company said in a statement.

Whether cash will be returned by dividend or share buyback is undetermined as yet, but it will be the first cash return to shareholders in a decade, when Tenon returned $670 million to shareholders relating to sales of the former Fletcher Forests timber estate. The company has not paid a dividend since it was listed as Fletcher Forests.

A decision on the form of cash return “will depend on a number of factors, including our core goal of seeing our share price lift,” said chief executive Luke Moriarty.

The company also announced a “significant upgrade” in its forecast for earnings before interest, tax, depreciation and amortisation at the mid-point of an average United States housing market recovery, from US$35 million to US$45 million.

The forecast assumes 1.7 million US housing starts a year and a US-New Zealand dollar exchange rate of 70 US cents, compared with a rate this morning of 82.95 US cents and an internal hedging rate of 80 US cents at Tenon.

“Key indicators point to ongoing job recovery in the US economy, combined with rising home prices and pent-up housing demand,” Moriarty said. “This has already seen a recovery in new home construction levels, but only to levels equivalent to the bottom of previous cycles.

“In others, over the past 50-plus years, US housing starts have been above the current level for almost 90 percent of the time.”

However, there were now “headwinds” in the US market, including the impact of the US Federal Reserve’s tapering programme to reduce monetary stimulus and severe winter weather, which has affected activity.

For the six months under review, the company turned over US$197 million, up from US$174 million in the same period a year earlier, to produce ebitda at the six month mark of US$3 million.

In the prior period, Tenon recorded an ebitda loss of US$1 million.

The company confirmed its “objective” this year to double the US$1 million ebitda achieved in the last full financial year.

The current period’s break-even net result compares with a US$2 million loss in the first six months of the last financial year.

Elaborating on previously announced intentions to improve Tenon’s exposure to US investors, where 90 percent of the company’s revenue is derived, Moriarty said “while one obvious path we will be considering is a dual stock exchange listing … we will also be undertaking a much wider company review to see how the company can be best positioned to create value for shareholders as the current cyclical recovery progresses.”

He reiterated directors’ view that Tenon shares remain undervalued, based on an Edison International Research report prepared for the company last year that put a value range on the shares of between $2.05 and $2.55, assuming it can access tax losses built up over the last decade.

Tenon shares have traded as low as 50 cents apiece during the long recession in the US housing market, which began with the 2006 sub-prime mortgage market collapse and helped cause the 2008 global financial crisis.

Their low point in the last year was 86 cents, in May, but the shares have climbed 47 percent in the last 12 months to close yesterday at $1.47. The thinly traded shares, of which nearly 60 percent are held by investment vehicle Rubicon, did not move in early NZX trading today.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Real Estate: Housing Prices Head South In Most Of NZ

Housing became more affordable for first home buyers in many parts of the country including Auckland last month, as falling prices more than offset rising mortgage interest rates. More>>

ALSO:

Cosmetics & Pollution: Proposal To Ban Microbeads

Cosmetic products containing microbeads will be banned under a proposal announced by the Minister for the Environment today. Marine scientists have been advocating for a ban on the microplastics, which have been found to quickly enter waterways and harm marine life. More>>

ALSO:

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:

NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news