South African forestry company Yorkor Timber Organisation says a decline in its first half earnings should be seen in the context of big changes within the country’s timber industry.

The company’s headline earnings per share for the six months to June 2004 fell to 10.5 cents from 14.9 cents a year ago. Sales rose from R52.9m to R66.8m in the first half of 2004, while gross profits increased from R31.8m to R34.1m.

Yorkor’s evergreen contracts, which it had held for 40 years, were recently cancelled following a decision by the Supreme Court of Appeal. All sawmills who also held such contracts had relinquished their indefinite log supply rights more than five years ago to make way for privatisation of the state forestry assets.

The company said engineering problems at newly acquired sawmills in the Mpumalanga Highlands contributed to the decline in earnings. The mills are now operating properly.