Operating earnings before interest and tax (EBIT) were NZ$68m for the quarter, down NZ$9m, with the recording of a NZ$9m charge for the company’s equity based incentive plan, designed to align senior employees’ performance with shareholder interests.
Peter Springford, CHH CEO, says the solid result was underpinned by excellent performances at a number of the company’s businesses.
"Over the last quarter our Kinleith Mill achieved its best ever pulp and paper production volumes, translating into record volumes for paper sales. Our laminated veneer lumber (LVL) business also recorded its best ever sales volumes in New Zealand and international markets, says Springford.
"In Australia our Radius and Woodlogic businesses achieved record product delivery performance during the quarter, demonstrating our focus on operational efficiency and achieving supply chain excellence.
"Despite the challenges of adverse foreign exchange rates and rising freight costs, these results show the benefit of the company’s ongoing focus on improving operating performance and reducing costs.
"The company has also been well positioned to leverage the buoyant New Zealand and Australian building markets. The Australian market is showing signs of moderating, however the New Zealand market continues to be strong. Our previously announced investment of A$ 41 million in the Mount Gambier sawmill and particleboard facilities will bring greater efficiency and shows our confidence in Australian markets in the longer term."
On March 25 2004, CHH announced it had entered into an agreement to sell its Tissue business and its 50 per cent interest in Sancella to Svenska Cellulosa Aktiebolaget (SCA) for NZ$1.05 billion.The profit on the sale of these businesses is expected to be around NZ$ 464 million and will be recorded as a restructuring and non-recurring item in the second quarter.