Carter Holt Harvey picks weaker second-half result

By Nick Stride

Friday 19th July 2002

CAUTIOUS: Chris Liddell says uncertainty is dogging world markets

A strong first-half earnings recovery from Carter Holt Harvey had analysts revising their forecasts upward but the company sounded a note of warning.

Carter Holt reported a $73 million net profit in the six months to June, up from a $15 million loss a year ago.

The major drivers of the turnaround were rising pulp and paper prices, stronger log and forest products markets, tight control of capital expenditure and working capital, and continued cost-cutting.

Chief executive Chris Liddell said strong Australian and New Zealand markets had contributed.

But he was cautious about the outlook for the second half because of the uncertainty dogging world markets.

The second half would be about consolidating the gains of the first rather than continuing with the trend.

The company has chopped its ratio of working capital to net sales from 20.4% a year ago to 15% in the latest quarter.

The forest products (logs) division reported pre-tax earnings of $63 million, up from $28 million a year ago.

Sales to China were growing strongly. Carter Holt said they had risen 350% between 1999 and 2001 but didn't give a current figure.

Pre-tax earnings for the wood products division were $33 million, up from a $2 million loss.

Tissue earned $22 million, up $8 million, and packaging was up $6 million at $15 million.

The only disappointment was pulp and paper, whose earnings fell to $10 million, from $26 million.

The company said export prices had been weak but appeared to have bottomed in April.

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