Carter Holt Harvey delivers $113m half year profit

Date: 21 July 2005

Carter Holt Harvey delivers $113m half year profit

Carter Holt Harvey Limited today announced an operating profit from continuing operations of $113 million and revenues of $1,586 million for the half year ended June 2005.

The company recorded revenues from continuing operations of $838 million for the second quarter, up by $90 million over the previous quarter. Operating profit for the same period increased $15 million over the previous quarter to $64 million due to improvements in the earnings from wood products and land sales.

Chief Executive Officer Peter Springford said the half year results were in line with expectations and showed the benefit of a clear strategy in the face of challenging markets.

“Carter Holt Harvey has continued its focus on its areas of competitive advantage; namely wood products, and pulp, paper and packaging, supported by forests,” he said.

“Despite the influence of mixed export markets, strong domestic currencies and softening building markets on both sides of the Tasman, the company has delivered increased sales volumes and productivity improvements across its businesses."

FINANCIAL SUMMARY

YTD Ended // Quarter Ended
Jun 2004 / Jun 2005 / Variance // Mar 2005 / Jun 2005 / Variance
Revenue 1,612 / 1,586 / (26) // 748 / 838 / 90
Net FX gains/hedge income 66 / 60 / (6) // 31 / 29 / (2)
Operating profit from continuing operations 138 / 113 / (25) // 49 / 64 / 15
Forest asset fair value change 34 / 109 / 75 // 97 / 12 / (85)
Restructuring and non-recurring items (37) / (9) / 28 // (3) / (6) / (3)
Income from associate companies (1) / – / 1 // - / - / -
Finance costs (22) / (27) / (5) // (11) / (16) / (5)
Tax expense (33) / (46) / (13) // (42) / (4) / 38
Profit from continuing operations 79 / 140 / 61 // 90 / 50 / (40)
Net Debt to Total Capitalisation (1.7%) / 16.9% / 18.6% // 14.6% / 16.9% / 2.3%
EPS for continuing operations 4.5c / 10.6c / 6.1c // 6.9c / 3.7c / (3.2c)

The company reported improved earnings from wood products during the quarter driven by increased sales volumes in the Australian market and the inclusion of revenue from the Tenon structural business.

“The Australian housing market continues to come off the highs of 2004 and we are beginning to see a softening in the New Zealand lead indicators such as building consents,” said Mr Springford.

“Our Pulp & Paper facilities are operating well with half year production records reported at both the Whakatane cartonboard and Kinleith mills. Kinleith successfully conducted its annual maintenance shut over 11 days in May – a project carried out within the planned timeframe and cost."

The company saw the benefit of Packaging’s productivity improvements begin to flow through with the business reporting an improved operating profit for the quarter. This was despite price pressure in the New Zealand kiwifruit market and reduced sales volumes in Australia.

“The Forests business reported a $34 million profit – $11 million higher than the previous quarter due to cost reductions and land sales,” said Mr Springford.

The company also announced a fully imputed interim dividend of 5.0 cents per share for the year ending December 2005. The increase reflects the company’s strong cash flows and the change in its dividend guideline to target a pay out of 60% of after-tax profits, adjusted for abnormals, over the cycle.

“Carter Holt Harvey continues to have a strong balance sheet and cash flows with a workforce focused on improving returns to shareholders. While there has been media speculation since International Paper announced the review of its CHH shareholding, our people remain focused on the task at hand. It is still early days in this process and for our employees, suppliers and customers it is very much business as usual."

Carter Holt Harvey has adopted International Financial Reporting Standards effective 1 January 2005 and where appropriate comparatives have been restated. All numbers are for continuing operations (and therefore exclude the tissue business sold last year).

Unless indicated, all figures are in New Zealand dollars.

ENDS

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