Evergreen keeps options open

By LIAM DANN

Listed forest owner Evergreen Forests may be forced to consider alternative uses for its land if currency and shipping costs continue to make log exports unprofitable.

Chairman Peter Wilson said yesterday that it was difficult to justify replanting land with trees based on present dollar returns.

The company has reported a net loss of $12.06 million for the year to June 30.

The result, a steep reduction on last year's $36.48 million loss, was achieved on flat revenue of $40.25 million, from $40.10 million last year.

The result included a $17.3 million net negative revaluation of the company's forests. Last year's loss was largely due to a negative revaluation of the company's forests.

Wilson said the result was unfortunately all too predictable given the ongoing strength of the dollar and high cost of shipping.

The booming Chinese economy has increased the global demand for commodities.

That has been good news for farmers but the negative spin-off for forestry companies has been the increase in the cost of shipping worldwide.

New Zealand forestry companies have also struggled to cash in on the economic boom in China because pinus radiata wood is not popular with builders there.

Wilson said Evergreen's board could not afford to rule out options such as turning land back to pasture.

"We have very patient shareholders," he said. "But we can't just continue on as we have. We have to do more."

* Perpetual Trust has received a conditional offer for the purchase of the Nuhaka Forestry right from Rotorua-based GMO Renewable Resources. The trust is evaluating the offer and any agreement which may be entered into will be subject to approval of the sale by NUH's unit-holders. The trust is recommending that unit-holders retain their units pending another announcement.