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Carter Holt Harvey earnings weak
AUCKLAND, New Zealand (Reuters) -- New Zealand forest-products company Carter Holt Harvey Ltd. posted a weaker fourth quarter net profit on Wednesday, hurt by a bitter restructuring at its biggest pulp and paper mill. New Zealand's largest forest owner and a maker of products from tissues to timber and wood panels benefited from strong housing starts in New Zealand and Australia, but its key pulp market suffered from weak prices throughout the year. "They're certainly not achieving their cost of capital, although they are moving in the right direction. At the end of the day, they are very much price takers in a number of their core businesses," Forsyth Barr forestry analyst John Cairns said. Carter Holt made a net profit of NZ$4 million ($2.2 million) for the December quarter, down on NZ$25 million of a year earlier, due mainly to a NZ$47 million restructuring charge. In line with forecastsBefore one-off charges, the group reported an annual net profit of NZ$209 million, in line with analysts' average forecasts of NZ$208 million according to a survey of nine analysts by Multex Global Estimates. After one-offs, annual net profit came in at NZ$137 million, up from just NZ$25 million a year earlier. The company declared a three cents a share dividend. Carter Holt shares, half owned by the world's largest forest products company International Paper Co., last traded steady at NZ$1.78. The stock rose 2.9 percent in the year to December, outperforming a 5.3 percent fall in benchmark NZSE-40 Index over the same period. Carter Holt is Australasia's largest supplier of sawn timber and plywood, harvesting more than five million cubic meters of radiata pine from its 330,000 hectare (815,000 acre) forest estate a year. New CEO delivers first earningsNew CEO Peter Springford, presenting his first quarterly result, told media and analysts that strong cash flows and reduced capital spending had reduced the company's net debt to total capitalization to 19 percent. Operating earnings of NZ$82 million for the quarter were up 21 percent on a year earlier with all segments improved except pulp and paper. The company's wood products division posted quarterly earnings before interest and tax (EBIT) of NZ$29 million versus NZ$17 million a year earlier as volumes and prices rose. Forest EBIT of NZ$32 million was up 52 percent on a year earlier while tissue EBIT was up to NZ$17 million from NZ$14 million. Packaging EBIT rose 12.5 percent to NZ$9 million. Springford, a New Zealander who formerly headed International Paper's Asian unit, said there had been a decline in Korean log prices but was confident of a bounce back in the first quarter. The housing market in Australia and New Zealand continued to be strong although a softening in Australia was expected by the second quarter. Pulp and paper lost NZ$5 million at the EBIT line, compared to a NZ$6 million profit in the December quarter 2001. Plant closure hits profitsCarter Holt's major Kinleith pulp and paper mill on New Zealand's North Island was largely responsible for a NZ$47 million charge for restructuring costs as the company outsourced maintenance work in an effort to improve profitability, prompting strikes from mill workers. With annual output of more than 600,000 tons of pulp and paper, each $10/ton rise in pulp prices adds around NZ$10 million to Carter Holt's earnings before interest and tax. While pulp prices had started to improve on the back of lower than normal supply, improvements in the paper market were needed for the price rises to be maintained, the company said. Carter Holt parent IP is due to report on Thursday, along with Nordic heavyweights Stora Enso and SCA.
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