Rubicon CEO expects Tenon growth

2.20pm

Rubicon expects to continue to reap the benefits of gaining a majority stake in wood processor Tenon earlier this year.

Rubicon gained a 50.01 per cent stake in Tenon in June, after launching a partial takeover offer in April.

Speaking at Rubicon's annual general meeting today, chief executive Luke Moriarty said there were several opportunities for Tenon to enhance its value and build a world-class business.

Mr Moriarty said much of Tenon's current output took the form of "commodity" lumber and Tenon could widen its higher-value product offerings.

"To date the focus has been on clear boards and mouldings into the United States -- and of course the returns have been highly profitable. But a full appearance strategy would extend far beyond these two categories -- into the windows, doors and furniture markets for example," Mr Moriarty said.

He said Tenon had only just started investigating the furniture sector, through a small investment in Zenia House. He said the sector has potential to turn into a high-margin segment for Tenon, particularly if its products were targeted to the mid to top-end of the market.

Mr Moriarty said while Tenon was reasonably well established in the US market, it had only a "very small toe in the water" in Europe.

He said Europe was potentially an interesting market for Tenon, because of its high consumption of softwood pines in its appearance segments.

"In furniture in particular, Europeans are well-used to working with softwoods, with around 40 per cent of this segment being softwood-based. So, with access to New Zealand's environmentally certified clear-wood pine resource, the opportunities are clearly there for Tenon to explore," Mr Moriarty said.

Rubicon's shares were up 1c today at 91 cents, up around 30 per cent on the 70 cents they were fetching at Rubicon's last AGM in September last year.

Mr Moriarty said Rubicon's share price was up 125 per cent since it listed a little over three years ago, equating to a 27 per cent compound return per year.

In May the forestry and biotech investor reported a 91.4 per cent slump in its March year net profit after tax to $1.21 million, from $14.1 million the previous year.

- NZPA