Logs slow Forests' growth

By Libby Middlebrook

Fletcher Forests generated an unspectacular $4 million in net earnings before unusual items for the half-year to December, 1999, its performance restrained by stagnant log prices and a slow recovery in demand after the Asian economic downturn.

The result was a minor improvement on the December, 1998, result of $3 million.

But it was behind the half-year to June last year, which produced net earnings before unusual items of $6 million.

One-off gains from insurance payments after the 1998 Chile forest fire boosted the division's net earnings to $15 million.

It has not declared a dividend.

Chief executive Paul Fowler said strong sales from manufactured products in New Zealand and the United States, and increases in demand for wood from recovering Asian economies, would boost the division's performance in the short term.

He said demand from the Japanese housing market was not expected to improve significantly, but demand from Asian plywood manufacturers was expected to remain strong.

Operating revenue rose to $302 million, up 20 per cent on the half-year to December 1998, when it generated $271 million. Operating earnings before interest and tax were $40 million ($31 million in 1998) and earnings rose to 1.8c a share (0.4c).

The company will pay no interim dividend.

Fletcher Forests' 50 per cent interest in the Central North Island Forest Partnership resulted in net losses of $14 million, against losses of $18 million in the same period in 1998. The losses resulted from high depreciation charges based on the price paid for the forests in 1996, when the near-term outlook was stronger.