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CHH Ends half year in strong financial position

Carter Holt Harvey ends half year in strong financial position

Carter Holt Harvey was pleased to advise shareholders today that net earnings for the six months ended 30 June 2004 were $496 million, compared to $92 million for the same period last year. This result includes a gain of $440 million from the sale of the company’s Tissue business, recorded as a restructuring and non-recurring item, less unrelated restructuring costs of $39 million.

For the June quarter, consolidated net earnings were $458 million compared to $41 million for the June quarter last year. Operating EBIT (earnings before interest and tax) was $58 million, down $10 million on the same quarter last year. Excluding foreign exchange contract gains, the charge for the company’s share growth plan and the divestment of Tissue, underlying business performance improved by $30 million.

Chief Executive Officer, Peter Springford, said it had been a significant six months for the company, with the successful sale of the tissue business and the purchase of Chinese specialty panel manufacturer PTP.

“We have talked about growing the business in our areas of core competency – pulp, paper, packaging and wood products, supported by forests. We are now seeing this strategy beginning to be executed in a disciplined way. This, however, will not distract us from focusing on the efficient operation of our existing businesses, and on the challenges we are working to overcome.”

Through its focus on total productivity the company is successfully making up for some of the effects of the strong New Zealand dollar. So far this year productivity improvements have offset 82% of the impact of foreign exchange rates on the company.

Other challenges for the company in the second quarter were weak log export markets, high international freight rates, and overcoming operational difficulties in its Australian wood products business.

During the second quarter the company successfully installed a new A$15 million drymill at its Mount Gambier (South Australia) facility, and completed the one month shut of its Whakatane carton-board mill for installation of the $62 million wet end upgrade. In addition to this, the company is in the process of increasing production capacity at its Oberon (NSW) sawmill by 12%.

Peter Springford said although the company was in a strong financial position, it would continue to focus on improving efficiency and productivity across the business in order to increase returns to shareholders.

“We are very conscious that we need to maintain our focus on productivity. We are determined to achieve long term growth and sustainability of earnings in all key areas of our business and I believe we are making good progress towards delivering on this.”

In addition to the previously announced return of capital of $480 million by way of a share cancellation, the company has declared an interim dividend of 3 cents per share for the year ending 31 December 2004, to be paid on Thursday 19 August 2004.

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