A sluggish new housing market, Gunns’ cutting its timber intake and court litigation costs pushed VicForests to a loss of $96,000 in 2011-12 according to the group’s annual report. Source: Sydney Morning Herald
Chief executive Robert Green said it had been a challenging year. The poor economic climate, decline in new housing, high Australian dollar and competition from cheaper imported timber affected local forestry.
Mr Green said Gunns’ restructure resulted in its Heyfield sawmill, VicForests’ largest customer, cutting its timber intake by more than 20%, substantially affecting revenue and margins.
The factors led to a 17% decline in the total volume of sawlog and pulpwood sold, which was 1.45 million cubic metres in 2011-12 compared with 1.75 million cubic metres the previous year. Sales fell by 11.2% to $116.65 million.
Australian Sustainable Hardwoods has bought the Heyfield mill.
”This investment shows the confidence the industry has in the long-term future of the hardwood sawmilling sector,” he said. ”VicForests expects ash sawlog deliveries to return to normal in 2012-13.”
Mr Green said revenue was also hit by $3.1 million in legal costs, the highest in VicForests’ history, due to court actions by green groups.
VicForests won a case in the Supreme Court taken by a green group over operations near Toolangi, but the group had appealed.
Mr Green said VicForests’ financial results should improve next year due to a more stable customer base, a resolution of pricing issues with key customers, and the maintenance of sales as a result of this year’s tender for residual timber.
The tender was for the purchase and processing of about 800,000 tonnes per annum of hardwood residual timber for up to 20 years.
Mr Green said the resource outlook study found that the three big bushfires since 2003 would lower the volume of ash sawlog available from the Central Highlands from about 2028-29.
However, the volume of mixed species sawlog would be higher than previously forecast, he said, with the timber less affected by the 2009 bushfires than had been thought.
