Operating earnings before interest and tax (EBIT) were NZ$315m for the year. This was down five per cent on last year due primarily to industrial action at the Kinleith Mill and lower forest sales volumes.
EBIT for the December quarter was NZ$81m, on par with the same period in the previous year (NZ$82m). This would have been NZ$88m but for a NZ$7m charge in relation to the company’s pension fund.
During the December quarter, CHH recorded a NZ$918m charge to restructuring and non-recurring items. This included an NZ$876m write-down of the company’s forests and NZ$17m of costs associated with the closure of its Tokoroa sawmill. This resulted in a consolidated net loss of NZ$656m for the year.
Peter Springford, CHH CEO, says that the annual result reflected the fact the company had faced up to some tough decisions, and was responding decisively to challenging conditions, particularly in export markets.
“I am satisfied with the company’s operating performance over the course of the year, given the challenges faced by the industry. Looking beyond our one-off costs, the result for the year is a solid one. We have steadily improved productivity across the business, and these efforts are offsetting the effects of higher New Zealand and Australian currencies,” says Springford.
“Productivity gains are being achieved in all sectors of the company. Costs in our Forests business have been significantly reduced, our Tasman facility has achieved record pulp production, Kinleith has broken five production records since the successful conclusion of last year’s changes, production capacity in our Australian wood products operations is up five per cent and our Sorbent tissue brand continues to grow, with all key indicators up on the previous year.”
A challenging year for the company in export markets was offset by a buoyant building industry on both sides of the Tasman. Projections indicate domestic markets are likely to remain strong into 2004.
“In the year ahead we will continue to focus the company around our core strengths in wood fibre processing while pushing towards world class productivity and taking advantage of any improvements in commodity prices as the global economy strengthens,” said Mr Springford.
The company’s Board of Directors declared a final dividend of NZ 3 cents per share for the year ended 31 December 2003. The dividend will not carry any tax credits and will be paid on 26 February 2004.
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