One of the most significant events affecting earnings is Gunns’ participation in the Tasmanian Forest Statement of Principles agreement, announced earlier this month. The company says as a party to this agreement it is committed to prompt action to demonstrate good faith.

Actions include restricting woodchip export business to plantation woodchips as soon as possible, and reviewing all its Tasmanian operations that are involved in processing timber from native forests and, as a priority, exiting the processing of timber sourced from high conservation value forests.

The company also cited the strength of the Australian dollar versus the US dollar as significantly impacting the competitiveness of hardwood chip exports into key markets of China and Japan.

A statement to shareholders outlined, “Japanese demand in particular remains depressed. We do not expect any currency relief in the period to June 2011 and have adjusted our forecast accordingly.”

The high Australian dollar has also resulted in an increase in imports and further margin pressure in Gunns’ timber distribution business where housing driven demand remains inconsistent.

Another factor, which may affect Gunns’ bottom-line is its intention to review its Jarrah sawmilling, processing and retail sales operation in WA which the company says is not viable in the long term. A final decision on the continued operation of this business will be made by November 15.

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