Hardboard, softboard, door facings and decorative wall panelling manufacturer and distributor Masonite (Africa) on Wednesday reported a 58% drop in headline earnings from R81.6 million to R34.6 million for the year ended December.

This resulted in headline earnings per share shrinking from 1,145 cents to 486 cents.

Masonite said the decline was mainly due to a change in the value of the biological assets. C during the year led to the domestic timber price falling, which impacted on the value of standing timber at the end of the period.

Revenue increased by 2% to R628.7 million (2008: R617.4 million) and earnings from operating activities (excluding the effect of the adjustment of biological assets - IAS 41: Agriculture) were down by 15% to R55.3 million (2008: R64.7 million).

"The impact of the strong Rand and the global recession affected sales and gross margins negatively.

"While it was possible to maintain domestic volumes, the availability of cheaper substitute products, and the currency, placed pressure on domestic pricing," the company stated.

It added that all operating areas of the company produced excellent performances, and the effective control of costs helped to reduce the impact of the lower prices in the market place.

The company ended the year with 61.3 million rand cash reserve (2008: R71.0 million).

Looking ahead, Masonite said conditions in the domestic market will remain tight in 2010. While some turnaround has been forecast, the relative strength of the Rand will have an effect on earnings.