FCL Can. profit off

Press, 26 October 1989, Page 27

FCL Can. profit off

« . Softer newsprint markets were blamed for Fletcher Challenge Canada’s 29 per cent drop in tax-paid profit for the third quarter of 1989.

.mThe firm, a 72 per cent subsidiary of Fletcher Challenge, yesterday announced a final profit of SNZ4O.6 million during the three months ended September 30, 1989, compared with a $53.6M profit in the same period last year. Sales in the September quarter of 1989 rose 9.8% to SNZSIS.9M ($469.6M 1988), but pre-tax earnings dropped 29% to SNZ66.9M ($93.9M), the company said. The quarterly drop pulled down aggregated results for the nine months ended September by 20% compared with the previous year. The company made an after-tax profit of SNZI42.BM ($179.8M) on increased sales of $NZ1522.7M (51472.4 M The company president and chief executive officer, Mr lan Donald, said an anticipated surplus in newspaper supplies had softened the newsprint market and was mainly responsible for the 29% drop in quarterly earnings. “Newsprint prices were under pressure throughout the quarter, with wide-

spread discounting in North America as markets continued to adjust to new and announced capacity increases,” Mr Donald said. The company’s Crofton newsprint mill cut back production during the summer, removing about 6000 tonnes of newsprint from the market. The company’s mills were now fully sold for the rest of the year, he said. In contrast, conditions for market pulp remained strong. Mr Donald said the SC26OM (SNZ347 million) modernisation project under way at Crofton had caused some intermittent production losses, which accounted for lower earnings from that sector. Income from lightweight coated paper fell

due to higher charges for pulp the company bought in. Markets for wood products remained steady, although prices weakened somewhat toward the end of the quarter. The rest of the year was likely to remain the same, with, flat demand for wood products, difficult markets for newsprint, but firm demand and prices for pulp and coated paper. Fletcher Challenge Cam ada (formerly British Columbia Forest Products) is 72% owned by FCL and is one of the group’s two major activities in Canada. The other, Crown Forest Industries, is a wholly owned subsidiary of FCL and its results are not included in the earnings of Fletcher Challenge Canada.

FLETCHER CHALLENGE CANADA 1989 1988 Third Third SNZ million 9 months quarter 9 months quarter SNZM SNZM SNZM SNZM Sales 1522.7 515.9 1472.4 469.6 Pre-tax earnings 245.2 66.9 _ 309.7 93.9 After tax, before extraordinaries 143.6 40.9 179.8 53.6 After extraordinaries 142.8 40.6 179.8 53.6 Conversion rate at September 30 (SNZI equivalent to 5Can0.69685 for 1989 and 5Can0.7476 for 1988).