Showing (someone) the money
Financial analyst with Shadforths, Matthew Torenius, said although timber giant Gunns Ltd had posted a net profit after tax of $33.6 million for the half year to December 31 — a jump of 95 per cent — once the Auspine purchase had been taken out, the figures started to look “a little bit weaker”.
Gunns shares continue to fall after the announcement, hovering around the low to mid 60-cent mark. In its half-year report, Gunns stated earnings-per-share were to be 6.2 cents, although this figure was disputed by some to be closer to 3.9c.
Its half-year report had a first-half net profit of $33.6 million. This was nearly double
that from a year earlier, of $17.2 million.
Chair John Gay said the core forest products division drove the strong result, with revenue leaping 18 per cent to nearly $356 million. He did, however, warn the commodity trade’s global softening would see a 15 per cent cut in woodchip sales in the second half of the financial year. This is the same reason given for extending the mill closures in February and March. (See below)
The tango or line dancing?
Gunns chair John Gay has announced Gunns is “expecting to reach agreement on key terms with a partner” by the end of this month. His comments around potential partners were that Gunns believed there was “strategic value in introducing a partner with a strong industry position to the project, including bringing construction, operational and marketing experience”.
He said the main funding source would be a debt facility being co-ordinated by a “leading European bank”.
Gunns is believed to be negotiating with several parties.
Kiwis on the block
Despite the good profit news in Australia, last month Gunns closed a veneer business over The Ditch, with 20 workers in Christchurch, NZ, losing their jobs.
Gunns bought the veneer company in 1999. A NZ report said “seven or eight” workers would be retained “to tidy up loose ends”, with the rest offered redundancies.
As with the rolling (temporary) February and March mill closures in Tasmania (see below), the timber behemoth said the global financial crisis forced the (permanent) NZ closure, citing plummeting forward orders.
Gunns has also announced plans to scale back the admin workforce for Auspine in South Australia, hoping to save $7.5 million.
Usual unusual shutdowns ramp up
The global financial crisis is tightening its grip on timber giant Gunns Ltd as overseas demand for woodchips falls. Temporary shutdowns at Gunns’ Tasmanian woodchip mills continued last month — although for longer than Gunns originally announced — as world markets for the product softened. The company has also said the four-day week will remain in place for three Tasmanian woodchip plants until the end of this month.
The Mercury reported that woodchip stockpiles had been building at the Burnie, Bell Bay and Triabunna ports. The newspaper said operations would be scaled down further at the Hampshire, Bell Bay, Triabunna and Tamar Valley woodchip mills.
Forest Contractors Association chairman Rodney Bishop said, “All contractors in [Tasmania] are back to about 80 per cent of their base quotas on woodchips and it is going to be hard.”
A Gunns’ spokesman confirmed “changing stock levels” would see “some minor shutdowns” at the mills, but said it was “not unusual”.
Forestry Tasmania’s Michael Wood said Gunns’ decision to halt production was a sign the global meltdown was beginning to hurt the industry. Of the idea to close operations for a week at a time on a rolling basis, Wood said, “It’s a fairly unusual event. It happens from time to time when the markets are very low and we try and adapt to deal with those circumstances.”
Timber industry analyst Robert Eastment told ABC News that the expected fall in Japan’s demand for woodchips meant Gunns would have to review job numbers, while a Gunns spokesman said the company would not comment on possible cuts.
Gunns’ acquisition of softwood company Auspine last year had boosted its latest profit result, ABC News reported.
Australia’s first carbon-neutral remanufactured toner cartridge
Printer Workz, a producer of remanufactured printer cartridges, has been accredited by the Australian Government Department of Climate Change (DCC) as “Greenhouse Friendly TM” (and yes, for the questioning minds, the government has trademarked “Greenhouse Friendly”, although we can all still do our bit to help…). The company joins just a handful of Australian companies in this echelon, which is usually the domain of corporates.
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at [email protected]
Sign up to the Sprinter newsletter