Lingui Developments Berhad (KLSE:LGDS) has posted an interim pre-tax profit of RM45.5 million (US$11.98 million) for the period ended 31 December 2002, a sharp improvement from a pre-tax loss of RM13 million for the same period in the previous year. During the second quarter, pre-tax profit amounted to RM 15.5 million against RM8.4 million in the same quarter in the previous year. The Lingui group is engaged in logging, processing and marketing of logs, veneer and plywood, manufacture of wood products, extracting of timber, forest plantations and river transportation. It said the profit figures include two months results of Samling Plywood (Miri) Sdn Bhd, the acquisition of which was completed during the quarter under review. It also included a writeoff of RM7.2 million (for the quarter under review) and RM 14.1 million (for the financial year to date) which is equivalent to the interest costs that has been capitalised to forest crop of the New Zealand operations for that period. Revenue in the first half of the company's financial year amounted to RM503.8 million, up from RM329.8 million in the corresponding period in the previous year, it said in a statement. During the current quarter, revenue rose to RM251.9 million from RM160.8 million for the same quarter in the previous financial year. It said timber prices generally softened during the quarter under review. The log supply situation remained a significant contributing factor, with much uncertainty surrounding the actual supply position. Log supply from Indonesia has been fluid as efforts to effectively rein in illegal logging activities have only been partially successful so far. The plywood market, as a consequence, also experienced some uncertainty over the supply situation. Lacklustre demand from Japan with relatively flat housing starts numbers being reported and a overstocked supply position further aggravated the negative sentiments. Lingui said the downtrend in plywood prices were also partly due to the effects of the weakened rupiah, which saw Indonesian producers willing to sell at lower US dollar prices. In terms of volume, logs sales was below that of the preceding quarter while plywood maintained at about the same levels as that of the preceding quarter. It said the group has remained vigilant to ensure that they were tightly controlled to face an increasingly competitive market situation. It said the financial year results of the group will be primarily dependent on the direction of timber prices. The effective enforcement against illegal logging by Indonesia and the general economic outlook of US and Japan will be the main contributing factors to the direction of timber prices. The increasing competition from China will also be another challenge facing the group. Asia Pulse