Tenon considers payouts in US dollars

If Tenon starts paying dividends this year, the cheques in shareholders' mail may be in US dollars.

That is one option being considered by the company formerly known as Fletcher Forests, as it mulls adopting the US dollar as the currency it uses to run the business - once the sale of its structural business is settled.

A statement yesterday outlined the proposal - and also firmed up guidance that earnings for the year to June 30 will be about US$29 million ($41 million).

The forecast for operating earnings before depreciation and amortisation took into account the $165 million sale of Tenon's structural business to Carter Holt Harvey, due to settle this month.

In February, Tenon said it expected earnings for the full year to be $60 million to $64 million - before accounting for the sale of the structural business.

On the currency issue, chief executive John Dell said most of its revenue and earnings came from US distribution operations, and the US was also the main market for its Taupo processing operations.

He said shareholders needed to understand they owned a US-dollar driven business.

"Adopting the US dollar as the company's currency will provide greater transparency as to the performance of Tenon's business, which is currently being masked by the translation of US-denominated earnings into New Zealand dollars."

The company's dividend policy is not finalised but the aim is to return between 20 and 40 per cent of net cash from operating activities. Payouts could start in the second half of the year.

Chris Stone, head of research for McDouall Stuart, said Tenon would avoid currency fluctuations if it adopted the greenback.

He said it might be a little strange for shareholders to receive foreign currency cheques.

But, said Dell, "the shareholders would be looking forward to getting dividend cheques, fullstop."

- additional reporting NZPA