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DEAR SHAREHOLDER, It is pleasing to report that Evergreen has recorded a profit of $3.5 million for the six months ended 31 December 2000. The Company is well placed to record its third consecutive annual profit improvement for the full year ending 30 June 2001. Internationally, log prices which had recovered off cyclical lows in early 2000 stabilised around mid year but have softened again over recent months. Against this, the Company's record of consistent earnings growth is a creditable performance and demonstrates the benefits of retaining the flexibility to manage harvesting operations to match levels of demand for different grades of logs in domestic and offshore markets. We expect market conditions to remain relatively flat over the 2001 calendar year. In that event, the Company's near term profitability will stabilise at or about present levels. Beyond 2001, the Company's harvest capability will increase (see graph, bottom of this page) and the prospects for significant further profit improvement are good.
OPERATING RESULT A surplus of $3.5 million for the six months ended 31 December 2000 is in line with expectations. Operating revenue increased relative to the corresponding period last year mainly because of third party trading carried out by Evergreen's subsidiary marketing organisation, Forestry New Zealand. The Company continues to develop markets for its higher quality pruned logs in Korea and for industrial grade (unpruned) sawlogs into India. The proportion of logs sold onto the domestic market has also increased, and now represents about one third of sales (see pie graph, below). This more diversified customer base is a positive development.
SHARE REGISTER The company is pleased to note that two new overseas shareholders have become substantial security holders over the past six months. Both of the new shareholders are institutional clients of the International Woodland Company (IWC). IWC is a Danish-based forestry management and investment organisation.
OUTLOOK Evergreen's maturing forest estate reflects the company's transition from its development phase to a more production- and profit- oriented focus. The company has plans for further growth with associated economies of scale and operational synergies. At the same time, we will explore opportunities for investment in related areas such as forest management and marketing, which complement the company's core investment activities. We are confident that a combination of our initiatives in this respect, our focus on careful management of our forest estate and improved prospects for the New Zealand forestry industry in general will combine to provide improved shareholder returns. Enhancement of shareholder value, particularly through better value recognition in the company's share price, remains the singular focus of both the company's Board and management.
Source: 2000 valuation reports. Figures include projected share of Nuhaka harvest. |
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