Carter Holt announces first quarter result, business sale

By Phil Boeyen, ShareChat Business News Editor

Friday 19th April 2002

Forest products group Carter Holt Harvey (NZSE: CAH) has beaten market expectations with its first quarter result and also announced the sale of its paper distribution businesses for $74 million.

The company says net profit for the three months ended March was $17 million, down from $19 million last year. A number of analysts had been picking a net profit figure of around $12-$13 million.

Earnings before interest and tax were $51 million, the same as the first quarter last year.

CEO, Chris Liddell, says the quarter was satisfactory given market conditions and reflects continuing improvements in most of the company's businesses.

"Compared with the previous December quarter, generally stronger markets for wood products and packaging, and a firmer tone to log prices were offset by weakness in export pulp and linerboard markets.

"The average price of Kinleith Mill's bleached kraft pulp was down 28% and linerboard was 16% lower compared to the March quarter last year. Also influencing the result was the seasonal slowdown associated with the Australasian summer break and Chinese New Year."

Mr Liddell says the March quarter also showed further progress on cash flow, lower net debt, a stronger interest coverage ratio and lower overhead costs.

The company used its first quarter announcement to outline details of the $74 million sale of its paper distribution businesses to Australasia's largest independent paper merchant, Edwards Dunlop

The sale of Raleigh Paper in Australia and BJ Ball Papers in New Zealand is conditional on finance and is expected to be effective by the end of April.

Mr Liddell says both businesses have been consistent contributors to profitability over recent years however the company has taken into account its ability to develop a leadership position and create growth opportunities.

"At a time of ongoing industry rationalisation, we determined that the potential of the businesses could best be realised by joining with a specialist company in the paper market such as Edwards Dunlop."

Mr Liddell says the combination of the Edwards Dunlop and Raleigh Paper/BJ Ball Papers businesses creates a clear number two competitor to Paperlinx in the Australasian market with a 20-25% market share.

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