Rubicon shares rise after CEO Moriarty says ArborGen on track to more than double earnings
By Rebecca Howard
March 6 (BusinessDesk) - Rubicon shares rose 9.1 percent after chief executive Luke Moriarty told shareholders its sole
asset ArborGen is on track to more than double annual earnings.
"We have great belief in the potential future upside in ArborGen," Moriarty told shareholders at the annual general
meeting in Wellington, according to speech notes published on the NZX.
The stock rose 2 cents to 24 cents in early trading.
Last June, the NZX-listed forestry investor took full ownership of ArborGen, agreeing to pay International Paper and
WestRock US$28.5 million in three instalments. It has paid US$18.5 million to date with a final US$10 million instalment
due in July.
On Jan. 31 it closed the sale of its 45 percent stake in Tenon ClearwoodPartnership for US$15 million, which allowed it
to pay Rubicon's outstanding subordinated debt and gives it the headroom to make that final payment.
ArborGen - which sells and develops advanced genetic seedlings to improve forest productivity - is now Rubicon's only
asset.
Moriarty said ArborGen generated positive earnings before interest, tax, depreciation and amortisation in the last
financial year and "the target for the current fiscal year ending 31 March is for ArborGen to more than double the
US$1.7 million USGAAP ebitda result achieved last year," he said. USGAAP is the result ArborGen would report in a US
listing situation and involves the full expensing of all R activities as USGAAP does not allow the capitalisation of these costs.
Moriarty said the result implies gross profit of around US$16 million. "ArborGen is well on track to achieving these
numbers – despite the tough hurricane season that prevailed during the year and which materially adversely impacted
sales volumes," he said.
He added the next fiscal year should see a "noticeable further lift in earnings yet again," and said the company would
provide guidance after it closes the current year.
The company has changed Rubicon's balance date to March 31 to align with ArborGen's own year-end.
(BusinessDesk)
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