Gain from tissue division boosts Carter Holt profit

12.00pm

Forest and building products company Carter Holt Harvey today reported a $496 million June half year net profit against $92m a year ago, thanks mainly to a $440m gain on the sale of its tissue business.

The business was sold during the half year to Sweden's Svenska Cellulosa AB for $1.02 billion.

Carter Holt, majority owned by International Paper of the US, is today holding a special meeting to approve the return of $480m of capital to shareholders -- or 27.5c per share.

In addition, an unchanged, unimputed interim dividend of 3cps will be paid on August 19.

Operating revenue rose 0.6 per cent to $1.863 billion and the pretax operating surplus rose 16.3 per cent to $107m. Adjusted for the sale of the tissue businesses, the increase in net sales was 7 per cent.

Offsetting the one-off gain from the tissue division sale were $39m of restructuring, redundancy and asset write-down costs.

The company paid $12m of tax compared with nothing in the year ago period.

Earnings per share rose to 28.5cps from 5.3cps.

Operating earnings before interest and tax (ebit) were $126m for the half year, down $19m on the same period last year. The key reason for the fall was a charge for the company's share growth plan ($14m) with the negative effect of currency on business earnings and hedging gains being largely offset by total productivity improvements and higher commodity prices, the company said.

For the quarter, ebit fell by $10m to $58m. Again, the main reason for the difference was the charge for the company's share growth plan ($5m). Total productivity improvements of $37m and commodity price increases largely offset the impact of currency and lower hedging gains.

During the quarter, Carter Holt announced the acquisition of an 85 per cent interest in the Chinese based Plantation Timber Products business for US$134m ($212m) which was settled on July 2.

In addition, the company said it had begun a review of the appropriate ownership level for its forest estate.

"We expect to update the market on this work in the fourth quarter," it said.

No breakdown of divisional performance was immediately available.

Carter Holt shares have gained 35 per cent to $2.19 in the last year.

- NZPA