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Fletcher gets a skinny return from first half

Friday 14th February 2003

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A strong performance from North America helped Fletcher Challenge Forests bounce back from last year's $302 million loss but the company only just got into the black.

Net earnings were $4 million after an "unusual" $16 million loss on the January sale of forest cutting rights to UBS Timber Investors for $US65 million.

Operating earnings were $47 million, up from $28 million in the six months to December 2001.

Fletcher said the improvement was driven by the processing and distribution operations, where earnings were up 91% to $21 million.

In particular North America contributed $17 million.

It said higher sales volumes, better prices, lower costs and the successful restructuring of the engineered wood products business all contributed.

Earnings from the forests and logs division were down $2 million to $14 million.

The company is forecasting June-year operating earnings of around the $58 million reported last year.

It expected New Zealand construction demand to remain firm through the current half-year but noted the Australian market appeared to be softening.

US demand was also firm but the rising New Zealand dollar was reducing returns.

The Korean, Japanese and Chinese log markets were "stable to firm" and US dollar prices had recovered from weakness late last year but the higher Kiwi dollar and increased shipping costs were affecting returns.

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