Fletcher Challenge Forests today reported operating earnings prior to forest revaluation for the six months ended 31 December 2003 of $23 million, compared with $47 million (prior to unusual items) recorded in the corresponding six months to December 2002. A challenging foreign exchange environment, high shipping costs, reduced sales from owned forest estates and loss of synergies from the cancellation of the Central North Island Forest Partnership (”CNIFP”) management contract, were all factors behind the decline in earnings.

Operating earnings from the processing, marketing and distribution businesses were $19 million compared with $21 million recorded in the corresponding six months to December 2002, and were significantly higher than the $9 million for the six months to June 2003.

Highlights during the six month period included:

The sale, subject to shareholder approval, of the majority of the Company’s forest assets and further progress on refocusing the business

A proposed $0.625 per share return of capital to shareholders in March

• Expansion of the US distribution business with the acquisition of an additional 33% of The Empire Company (”Empire”), raising ownership to 67%

• Commissioning, at the Taupo mill, of a third line producing solid lineal mouldings for the US market

• Progressing the development of new international markets for existing products and new high value applications for Radiata pine.