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CHH Announces Strong Start to 2004

CHH Announces Strong Start to 2004

Carter Holt Harvey (CHH) today announced that the company’s consolidated net earnings before tax for the three months ended 31 March 2004 were $54 million, up $3 million on the same period last year. Net earnings were down $13 million on that period due to the company recording a tax expense as advised at the end of last quarter.

Net sales for the quarter improved $31 million to $943 million compared to the same quarter last year. Operating earnings before interest and tax (EBIT) were $68 million for the quarter, down $9 million on the same period last year, with the recording of a $9 million charge for the company’s equity based incentive plan, designed to align senior employees’ performance with shareholder interests.

Overview of Results by Quarter
Quarters ending (NZ$million) March 03 June 03 Sept 03 Dec 03 March 04
Net Sales 912 928 1,007 1,018 943
Operating EBIT 77 68 89 81 68
Restructuring and non-recurring items - - - (918) -
Equity Earnings 2 2 1 2 2
Net Interest (28) (29) (20) (18) (16)
Earnings before tax 51 41 70 (853) 54
Tax - - - 35 (16)
Net Earnings 51 41 70 (818) 38

Chief Executive Officer, Peter Springford said the solid result was underpinned by excellent performances at a number of the company’s businesses.

“Over the last quarter our Kinleith Mill achieved its best ever pulp and paper production volumes, translating into record volumes for paper sales. Our laminated veneer lumber (LVL) business also recorded its best ever sales volumes in New Zealand and international markets. In Australia our Radius and Woodlogic businesses achieved record product delivery performance during the quarter, demonstrating our focus on operational efficiency and achieving supply chain excellence.

“Despite the challenges of adverse foreign exchange rates and rising freight costs, these results show the benefit of the company’s ongoing focus on improving operating performance and reducing costs,” said Mr Springford.

“The company has also been well positioned to leverage the buoyant New Zealand and Australian building markets. The Australian market is showing signs of moderating, however the New Zealand market continues to be strong. Our previously announced investment of A$41 million in the Mount Gambier sawmill and particleboard facilities will bring greater efficiency and shows our confidence in Australian markets in the longer term,” said Mr Springford.

On 25 March 2004, CHH announced it had entered into an agreement to sell its Tissue business and its 50 per cent interest in Sancella to Svenska Cellulosa Aktiebolaget (SCA) for $1.015 billion ($A890 million). The agreement is conditional on normal regulatory consents from the Overseas Investment Commission and the Foreign Investment Review Board. The profit on the sale of these businesses is expected to be around $464 million and will be recorded as a restructuring and non-recurring item in the second quarter.

Since this announcement, the company has reiterated its intention to grow its core business in the areas of Wood Products, Pulp, Paper and Packaging, supported by Forests.

“The strength of the Carter Holt Harvey balance sheet supported by our continued focus on operational performance allows us to move forward with confidence. We will continue to evaluate potential acquisition opportunities in a disciplined and structured manner focusing on our core strengths,” said Mr Springford.

Unless indicated, all figures are in New Zealand dollars.

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