Chilean sale boosts Carter Holt result

By LIBBY MIDDLEBROOK

Profits of forestry giant Carter Holt Harvey have ballooned by more than 200 per cent, boosted by the sale of its interest in Chilean forestry company Copec.

Auckland-based Carter Holt had net earnings of $202 million for the 12 months to March 3, 2000, up 226 per cent on the previous year's $62 million result.

Chief executive Chris Liddell said performance had strengthened due to stronger pulp and paper prices and growing demand for wood product.

Mr Liddell said the company's two-year-old cost improvement programme, Genesis, had contributed millions to the company's end-of-year result through increased efficiencies.

"Clearly the external conditions are better than they have been for some time, which has had an enormous effect, however log pricing hasn't returned to pre-(Asian) crisis levels."

Carter Holt, which in December sold its 30 per cent interest in Chilean forestry company Compania de Petroleos de Chile (Copec) for $2.5 billion - booking a $362 million gain - generated operating earnings before tax of $444 million for the 12-month period, up 616 per cent on last year's $62 million result. Sales increased across all of the 100-year-old company's five divisions, resulting in net sales of $3210 million, a 15 per cent rise compared to sales of $2794 million in the 1998-1999 year.

Earnings per share were up 222 per cent to 11.6c from 3.6 during the previous 12-month period, but the cash-rich company's dividend remains unchanged at 3c per share.

"I'd like to see our profitability a lot higher before we seriously think about raising the dividend," said Mr Liddell, who was reluctant to comment on potential future acquisitions.

In February, Carter Holt spent $423 million purchasing particleboard and sawmill facilities from CSR, Australia's largest building and construction company.

Meanwhile, Carter Holt's forestry division recorded earnings before interest and tax (ebit) of $110 million for the 12 months ended March, up 28 per cent compared to last year's $86 million result. The main drivers behind its improved performance were a record harvest, higher prices and increased sales, which jumped 17 per cent on last year.

Wood Products had ebit of $66 million for the 12 months to March 31, up 43 per cent on last year's 46 million result, with sales rising 14 per cent to $861 million from $754 million last year. Carter Holt, which is in the process of building a $131 million laminated veneer lumber plant in Whangarei, said higher demand for wood products was responsible for the improved result.

Pulp, paper and tissue was a solid performer, delivering ebit of $64 million, a 1500 per cent gain compared with ebit contribution of $4 million last year. Mr Liddell expected to increase the cost of tissue this year to offset the increasing cost of pulp.

Packaging was the worst performer of all of Carter Holt's divisions, generating ebit of $4 million for the 12-month period compared to ebit of $22 million last year. High competition and an Australian loss-making packaging business impacted the end-of-year result.

Distribution recorded ebit of $8 million compared with losses of $3 million last year on the back of increased sales throughout the retail chain Carters, while associated companies generated income of $124 million, a 37 per cent increase on last year's $90 million result.

Meanwhile, the company yesterday announced a new $15 million technology-based venture capital fund to encourage innovative and entrepreneurship within the company's 11,000 staff members. Focused on performance, innovation and leadership, Mr Liddell said employees would be invited to come up with fresh ideas which could be developed into commercial enterprises.

Last night, the company's shares were down 11c to $1.84.