Carter Holt's first quarter net profit below forecast

12.00pm

Carter Holt Harvey today reported its first quarter net profit fell 25 per cent from a year earlier to $38 million.

Analysts had forecast the company, 50.1 per cent owned by International Paper of the United States, would post a first quarter net profit before charges of $45 million, down from $51 million a year earlier.

A $13 million tax bill dented the March quarter result.

Pretax earnings were up $3 million at $54 million.

Net sales for the first quarter had improved by $31 million to $943 million compared with the same period last year, the company said in a statement.

Operating earnings before interest and tax, at $68 million for the quarter, were down $9 million on the same period last year. The company said this was due to the recording of a $9 million charge for the company's equity based incentive plan, designed to align senior employees' performance with shareholder interests.

Carter Holt chief executive Peter Springford described the result as solid and said it was "underpinned by excellent performances at a number of the company's businesses".

"Despite the challenges of adverse foreign exchange rates and rising freight costs, these results show the benefit of the company's ongoing focus on improving operating performance and reducing costs," Mr Springford said.

He said the company had achieved its best paper and laminated veneer lumber sales over the quarter.

Mr Springford said Carter Holt had also been "well positioned to leverage the buoyant New Zealand and Australian building markets".

"The Australian market is showing signs of moderating, however the New Zealand market continues to be strong," he said.

Mr Springford said the recently announced sale of the company's tissue business and its 50 per cent interest in Sancella to Sweden's Svenska Cellulosa Aktiebolaget (SCA) for $1.02 billion was expected to yield a profit of about $464 million. He said the profit would be recorded as a restructuring and non-recurring item in the second quarter.

Carter Holt has been suggested as a potential bidder for fellow wood processor Tenon, formerly Fletcher Challenge Forests.

Today, Mr Springford said Carter Holt would "continue to evaluate potential acquisition opportunities in a disciplined and structured manner focusing on our core strengths".

Carter Holt shares fell 4c to 222 by 11.30am having traded between 157 and 234 over the past 12 months.

- NZPA