Carter Holt Harvey today announced its December result, ending a solid year for the company. Operating earnings before interest and tax (EBIT) were $315 million for the year ended 31 December 2003. This was down 5% on last year due primarily to industrial action at the Kinleith Mill and lower forest sales volumes. EBIT for the December quarter was $81 million, similar to the same period in the previous year ($82 million). This would have been $88 million but for a $7 million charge in relation to the company’s pension fund.

 

During the December quarter CHH recorded a $918 million charge to restructuring and non-recurring items. This included an $876 million write-down of the company’s forests and $17 million of costs associated with the closure of its Tokoroa sawmill. This resulted in a consolidated net loss of $656 million for the year.

In June last year CHH advised shareholders of the possible non-cash write down of the company’s forests of up to $900 million from the current book value of $2.9 billion. This reflects the erosion of log realisations in key markets.

Overview of Results by Quarter:

 

Today’s quarter-point interest rate rise will cause more pain for dairy farmers already facing the prospect of sharply lower incomes next season, said Kevin Wooding, Chairman of Dairy Farmers of New Zealand (DFNZ).

The increase in the official cash rate to 5.25 percent will add to borrowing costs, and most analysts say it will put more upward pressure on the New Zealand dollar. A sharp rise in the kiwi dollar slashed $350 million from half year revenues of Fonterra Co-operative Group in its most recent half year.

Mr Wooding said he appreciated that the central bank was independent of government and had a hard task. It was trying to put the brakes on domestic consumption which would help stop inflation rising above three percent, the upper limit of its target band.

“The government says there is nothing it can do about the rising kiwi dollar. That is only half true. Local and central government can play a significant role in keeping inflation in check.

“One of the things they must do is stop piling more costs on to farmers and other New Zealanders. Since it came to power the Labour government has added 20 new taxes, while local authorities’ rate increases consistently beat inflation,” Mr Wooding said.

DFNZ is an industry group of Federated Farmers of New Zealand, New Zealand’s premier rural organisation with more than 18,000 members.