Rubicon posts profit in 'challenging' times

Forestry and biotech investor Rubicon reported a net profit of US$1.1 million ($1.7 million) in what it described as a challenging six months.

The profit compared to a US$1.3 million net loss for the previous December half, which was not directly comparable because of a change in balance date.

During the period it boosted its stake in forestry company Tenon, which reported earnings before interest, tax, depreciation and amortisation (ebitda) of US$5.9 million.

Rubicon said while this was in line with market expectations and guidance Tenon had given the market, it was not an earnings level with which it was satisfied.

Tenon has now put in place a number of initiatives to improve its second half earnings which included expanding its holdings and presence in the United States, cutting costs and re-negotiating freight rates and routes from New Zealand.

Rubicon said Tenon was forecasting much stronger ebitda of US$15 million in the second half of the year, and full year ebitda of around US$21 million for the full year.

" While there is the inevitable uncertainty around this projection -- it is dependent on unknown future events such as demand and pricing from Tenon's large customers and the path of the NZ exchange rate -- if achieved, it would be a very impressive turn-around in Tenon's financial performance," Rubicon's chief executive Luke Moriarty said in a statement.

Tenon recently announced a buy-back of up to 5 per cent of its shares. Rubicon will not participate in the buyback, but said its ownership in Tenon would increase to 60 per cent from 54.8 per cent.

Rubicon has been buying back its own shares, which it believes are undervalued. Since November it has bought back about 27 million shares -- or 10 per cent of its outstanding shares -- at an average price of 89c per share.

Rubicon announced yesterday plans to buy another 5 per cent of its shares on-market.

Shares in Rubicon last traded yesterday at 91c, having ranged between 85c and $1.15 over the past 12 months.

- NZPA