Forestry future is double or nothing - Carter Holt

By Phil Boeyen, ShareChat Business News Editor

Wednesday 24th April 2002

Carter Holt Harvey (NZSE: CAH) chief Chris Liddell says New Zealand's forestry industry is at a crossroads and needs to choose whether to double in size over the next 20 years or remain at its current level.

Speaking to shareholders at the company's annual meeting on Wednesday Mr Liddell said that there will be a "huge prize" for the country if it chooses the growth path.

"The industry today contributes 4% of New Zealand's GDP, sustains 22,000 jobs and earns $3.6 billion of export earnings.

"Under the growth scenario the industry could grow to more than 14% GDP, employ 60,000 people, earn $14 billion of export earnings, and create vibrant regional economies."

However Mr Liddell says under the no growth scenario the percentage of GDP will drop to under 4%, jobs and export earnings will only grow incrementally, and what growth there is will be mainly in low value log exports, with little or no regional development.

"Both paths forward are realistic scenarios. There are no guarantees that our industry will grow if it cannot create sustainable value. We need up to $6 billion in new capital to fund the growth scenario - over twice Carter Holt Harvey 's current market capitalisation.

"To ensure we take the right path, every participant in the industry, large or small, including the government, needs to play a role.

Mr Liddell says the so called "wall of wood" that came on stream in the early 1990's turned New Zealand's previously domestic focused industry into an export industry that receives marginal prices.

He says that, looking forward, the challenge is to create a true export based industry, developing and competing in the markets necessary to absorb the country's growing fibre base.

Carter Holt last week announced first quarter earnings of $17 million, down from $19 million last year but higher than market expectations.

Commenting on the result Chris Liddell said it was satisfactory given market conditions and reflected continuing improvements in most of the company's businesses.

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