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New innovation plan to take advantage of market changes

DATE 29/08/2011

Forestry Tasmania is moving ahead with plans to diversify its product mix and bring further investment in value adding to the State, Managing Director Bob Gordon said today. 

In releasing the Forestry Innovation Plan, Mr Gordon said FT was focussed on carving out a new exciting future, beyond the current difficulties caused by the structural change to the industry. 

“For some time now, Forestry Tasmania has predicted significant changes in our customer base. Of course, in the 2010/11 trading year, many of those changes were forced upon us in quick succession. 

“Nevertheless, we have for some time been aware of a convergence in domestic and international trends in forest products. We are planning ahead for those changes, by moving beyond Tasmania’s traditional wood product mix of sawn timber and woodchip exports.” 

Mr Gordon said the key trends heading into the future will be: 

“The unprecedented changes of the past two years are not, as many have predicted, intractable problems for the forest industry. Forestry Tasmania is looking at these changes from a different perspective: as a once-in-a-generation opportunity to reinvent our forest industry. 

“The vision of the Forestry Innovation Plan is to transform Tasmania into a regional hub renowned for state-of-the-art wood products, innovative silviculture, and carbon-neutral energy alternatives. 

“The future of our industry lies in diversifying our product range beyond sawn timber and woodchips, to include product like rotary peeled veneers, laminated veneer lumber, cross laminated lumber, and renewable energy in the form of torrefied wood and wood pellets. 

“These products are already in high demand in international markets. Engineered wood products are strong and versatile, and much more efficient to produce than sawn timber, in both production time and resource recovery. They are now widely used in building construction, as more planning authorities specify the use of wood for carbon storage and earthquake resistance. 

“Let’s be clear – there is no shortage of demand for Tasmanian timber products. The market has shifted from Japan to China, and fortunately we have worked hard over the past decade or so to develop strong trade links with the Chinese market. 

“While we will need to export woodchips and whole logs for the interim, ultimately we want to attract investment by wood processing in Tasmania. This strategy will create jobs for Tasmanians. 

Chairman Adrian Kloeden also today released Forestry Tasmania’s financial result for 2010/11. 

“Our financial performance reflects the challenges faced by FT and the forest industry. 

“We have posted a $12 million after tax loss for the year, which in the context of those challenges is quite modest and reflects a slight improvement on the previous year’s results. 

“We recorded an upturn in sales revenue to $156.5 million, compared with $135 million the previous year. As a result of increased forest product sales, payments to contractors also increased from $80.6 million in 2009/10 to $94.4 million in 2010/11. 

“At the same time, we managed a number of external issues that affected our business. One of the key issues that had a detrimental effect on our operating result was the closure of the Triabunna woodchip mill.” 

Mr Kloeden said those issues included:

Financial result 2010/11: key points 

Revenue: $175.968 million 

Operating expense: $179.307 million

inc:Salaries: $30.345 million
      :Payments to contractors: $94.493 million 

Operating loss after tax before other items: $12.090 million