Rayonier's NZ unit posts 28% drop in 2015 earnings

Rayonier's NZ unit posts 28% drop in 2015 earnings as soft Chinese demand erodes export prices

By Paul McBeth

March 2 (BusinessDesk) - Global forestry group Rayonier Inc posted a 28 percent drop in earnings from its New Zealand division as softer Chinese demand kept a lid on export prices, and returns from domestic sales were eroded by a weaker kiwi dollar.

Rayonier manages Matariki Forestry Group, the country's third-biggest forestry company with 13,000 hectares of plantations across New Zealand. Last month the Jacksonville, Florida-based company said its New Zealand division reported adjusted earnings before interest, tax, depreciation and amortisation of US$33 million in calendar 2015, down from US$46 million a year earlier. Revenue dropped 11 percent to US$161.6 million, even as total sales volumes edged up 2.2 percent to 2.41 million tons.

Of that, volumes of domestic saw timber sold rose 6.2 percent to 682,000 tons and domestic pulpwood was up 23 percent to 434,000 tons, while export saw timber sold jumped 19 percent to 982,000 tons and export pulpwood was up 17 percent to 83,000 tons.

Rayonier received lower prices in both domestic and export markets from the New Zealand division, with domestic saw timber down 18 percent selling at US$64.05 a ton, domestic pulpwood prices falling 15 percent to US$32/ton, and export saw timber dropping 21 percent to US$88.59/ton.

Since the start of 2016, New Zealand log export prices have been benefiting from cheap oil providing lower shipping costs, offsetting the muted demand from China.

Rayonier expects its New Zealand division's harvest will be down by about 10 percent in 2016 due to the age variation across its plantations, with prices broadly in line with 2015. It forecasts adjusted earnings of between US$23 million and US$28 million in the year.

The group added another 1,800 hectares of forestry rights in 2015 at a cost of US$9.9 million.

Last year, Rayonier injected NZ$242 million of capital into Matariki to increase its stake to 77 percent from 65 percent. Phaunos Timber Fund is the other partner in the Matariki joint venture.

Rayonier's group profit more than halved to US$46.2 million in calendar 2015, with the year earlier result bolstered from discontinued operations. Sales fell 9.7 percent to US$544.9 million.

The New York Stock Exchange-listed shares last traded at US$22.18, and has edged down 0.1 percent so far this year, outperforming the 3.2 percent decline in the Standard & Poor's 500 index over the same period.

(BusinessDesk)

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