Tenon posts $17M half year profit

By NZPA

Friday 11th February 2005

Tenon today reported net profit after tax (npat) of $17 million for the six months to December, turning around a $26 million loss for the same time the previous year.

The result for the corresponding period in 2003 included a loss from discontinued activities of $46 million.

Earnings per share were 6.1c up from 7.2 cents per share.

Earnings before interest, tax, depreciation and amortisation (ebitda) were $36 million, compared to $32 million for the six months to December 2003. Operating earnings for the period were $28 million, up from $25 million.

No dividend was declared. But shareholders can expect to pocket $1.15 per existing share as part of the company's planned $321 million capital return later this month. Three out of every four shares will be cancelled and the payment is expected to be made about February 23.

Chief executive, John Dell, said the earnings had been achieved in a challenging environment and said the adverse effect of foreign exchange rates had negatively impacted operating earnings by $14 million.

Looking ahead Tenon said it expected ebitda for the full year to be in the range of $60-$64 million - before accounting for the sale of the Structural Consumer Solutions business.

Tenon said it would provide further earnings guidance following completion of the sale.

Tenon has entered into a conditional deal to sell its Structural Consumer Solutions business to Carter Holt Harvey for $165 million plus working capital movements.

The agreement is subject to the completion of the Kawerau Sawmill upgrade, which is in the final stages of commissioning.

The $7 million front-end upgrade at Kawerau accounted for most of the company's $10 million capital expenditure during the six months. Another major project was a $1 million log pre-conditioning upgrade at the Mount Maunganui Plywood plant which was completed in October .

Dell said highlights for the December half year included solid earnings from its US distribution busine ss as well as continued strong demand from both sides of the Tasman for lumber products.

Shares in Tenon were unchanged in afternoon trading at $2.20, having traded between $1.47 and $2.29 over the past 12 months.

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