Black ink pours on Fletcher pulp

Improved pulp prices have contributed to a 121 per cent increase in third-quarter earnings for Fletcher Challenge Paper, New Zealand's largest pulp and paper producer.

Fletcher Challenge Paper, which is being sold to Norway-based Norske Skog for $5 billion, had earnings before interest in tax (ebit) of $113 million for the three months to March 31, a 121 per cent rise on last year's $51 million result.

Chief executive Alexander Toldte said the result reflected pulp price gains and improvements in the company's Southern Hemisphere newsprint operations.

Fletcher Paper pulp operation produced ebit of $70 million for the three-month period compared to ebit losses of $22 million for the corresponding period. Newsprint achieved ebit of $41 million, a 41 per cent drop on ebit of $70 million last year.

"[The] improved performance in the Canadian paper operations, including a reduction in paper inventory levels, was offset by an increase in fibre prices and the costs of restructuring that Fletcher Challenge Canada is undergoing," said Mr Toldte.

The company had unaudited earnings before interest, tax, depreciation and amortisation of $561 million for the nine months to March 31, up 23 per cent on the previous year's $455 million result.


Shareholders in Norske Skog, the fourth largest paper company in the world, are due to vote on the purchase of Fletcher Challenge Paper today. The company has offered to buy Fletcher for $2.50 a share along with a payment of more than $2.1 billion to cover the company's debt and the cost of separating the division from the rest of the group.

Fletcher Paper shareholders are expected to vote on the deal in July.