Annual Results To 30 June 2002

Annual Results To 30 June 2002
Company Reports Strong Growth In Operational Earnings

AUCKLAND, 22 August 2002 – Fletcher Challenge Forests today reported earnings before interest and taxation (EBIT), prior to unusual items, of $136 million including a forest crop revaluation 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(1).
- EBIT of $136 million represents a Return on Capital Employed of 9.6%.
- EBIT from our North American operations was up 136% on 2001.
- Cash flow from operations for the year was strong at $56 million, increasing from $22 million in the first six months to $34 million in the second half.
- 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.
- Our Japan Engineered Wood Products operation performed unsatisfactorily, and has been discontinued.
The results were achieved on the basis of a clearfell harvest from the Company’s estate of 1.59 million m3. Our annual harvest will increase by approximately 45% over the next five years as our forests mature, 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 ($25m) as a result of the strengthening New Zealand dollar. Markets were generally stronger in the last six months.

(1) See attached Reconciliation Schedule on page 4. Continues…

Net profit after tax, before unusual items, was $75 million, a $128 million turnaround compared to the loss of $53 million in the year to June 2001(1). Unusual items for the current period, principally the write-off of the balance of the Company’s subordinated loan to the CNIFP which was announced in the first half of the year, totalled $324 million after tax, resulting in a net loss for the year of $249 million.

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