KEY POINTS:
A usual spring lift in United States market conditions has not eventuated this year, wood products company Tenon says.
In fact, a longer winter and late spring arrival had exacerbated the expected difficult housing market conditions.
The company today said it was expecting earnings before interest, tax, depreciation (ebitda) and unusual items for the year to the end of June to be in a range of about US$16 million ($21.6 million) to US$17 million. That was in line with market expectations.
Last year Tenon reported net profit of US$5m, down from US$8m the previous year, and unchanged ebitda of US$20m.
For the six months to the end of December, it reported ebitda of US$9m.
Today Tenon said the strength of the New Zealand dollar against the greenback had also hurt its earnings.
Every 1c increase in the NZ dollar exchange rate against the greenback was equivalent to about US$750,000 in lost operating earnings, the company said.
In the first six months of the company's fiscal year the NZ dollar had averaged US75.5c, and strengthened further to average US79c for the five months to May.
Comparing the 11 months of the fiscal year so far with the previous full year, the average exchange rate strengthened from under US69c to around US77c.
As a result of a series of initiatives, Tenon said it was confident it was on target to achieve its goal of US$5m of annualised savings over the next two years. In addition, during the past 12 months it had cut overall employee levels by 13 per cent to just more than 1200 people.
Cost reductions and efficiency gains amounted to some US$3-4 million in additional ebitda, and had more than offset the strong headwinds, such as lower sales volumes, resulting from negative US housing market conditions.
Despite the downturn, the rollout of the company's outdoor products segment was advancing well, Tenon said.
Overall, the outdoor segment was four times the size of Tenon's traditional mouldings category.
Tenon also expected to see its net interest bearing debt, including all deferred liabilities and mortgages, fall from US$88m at June 2007 to around US$75m by June 30 this year.
Tenon shares were unchanged at 85c around noon today, having ranged between $2.70 and 74c in the past year.
- NZPA
