March 16, 2010 / 12:09 PM / 8 years ago

UPDATE 3-Sino-Forest Q4 earnings miss market view

* Q4 adj EPS $0.43 vs est $0.53

* Q4 rev $469.6 mln vs est $398.9 mln

* Says could see higher tax provision in 2010

* Shares fall 3 pct (Adds analyst comment)

By Ashutosh Joshi

BANGALORE, March 16 (Reuters) - Sino-Forest Corp TRE.TO posted quarterly earnings below analysts estimates as the Chinese forest plantations operator saw lower margins on its wood fibre sales, sending its shares down 3 percent.

The company, which owns and manages forest plantations in China, some of its units there could face increased taxation for 2010, and that may reduce its earnings for the year by about 5 to 10 cents a share.

Sino-Forest has been seeing continued increase in demand of its products, as the company, which sells most of its wood in China, is benefiting from major housing and infrastructure developments happening in that country.

For the quarter, the company reported a 52 percent increase in total volume of fibre sold at 5.2 million cubic metre, including sale of 3.5 million cubic metre of integrated plantations.

It realized an average selling price $76 per cubic metre for logs sold from integrated plantations, slightly lower than its year ago price.

The gross profit margin for sales of logs from integrated plantations was 35 percent, or $27 per cubic metre, compared with 37.8 percent, or $39 per cubic metre, a year ago, Sino-Forest said on its website.

On a conference call, Chief Executive Allen Chan said domestic wooden log prices improved by 10 to 15 percent during the quarter from low levels seen in the beginning of the year, and are expected grow further 5 percent to 10 percent in 2010.

“I think the prices got better, but they are still substantially below what they were at the peak,” Maison Placements analyst Brian Topp said by phone.

Wooden log prices, which hit their peak level in 2008, dropped sharply in the first quarter of 2009 and have been recovering slowly.

Analyst Topp said he expects wooden log prices could regain their peak levels by late 2010 or early 2011.

The company also said that it expects to sell about 17 million cubic metres of plantation fibre by 2011, compared with 14 million, sold in 2009.


For the fourth quarter, the company earned $112.7 million, or 49 cents a share, compared with $95.5 million, or 51 cents a share, a year ago.

Revenue rose 67 percent to $469.6 million.

Excluding items, it earned 43 cents a share.

Analysts on average expected the company to earn 53 cents a share, excluding items, on revenue of $398.9 million, according to Thomson Reuters I/B/E/S.

Sino-Forest shares were down two percent or 42 Canadian cents at C$20.89 Tuesday afternoon on the Toronto Stock Exchange. They hit a low of C$20.60 earlier in the day. (Reporting by Ashutosh Joshi; Editing by Ratul Ray Chaudhuri and Gopakumar Warrier) (; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging:

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