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Branchline Aug 29, 2011


Our financial results - and the way forward

This morning Forestry Tasmania’s Chairman, Adrian Kloeden, and I met with representatives of the media to take them through our financial result for 2010/11 and our Forestry Innovation Plan.

As a Branchline subscriber, you’ll be aware that the team at Forestry Tasmania has been responding to unfolding changes in the structure of the forest industry changes by seeking new business opportunities. In brief, we have been looking forward, not stagnating in the past. 

The Forestry Innovation Plan is the vision for the future that we have created from this work. 

It identifies the key trends that will shape our sector over the medium to long term, and the opportunities for value added processing that will allow us to capitalise on those trends.

Heading into the future, we expect to see:

•    less native forest timber available for processing, as more forest is reserved under the Intergovernmental Agreement;
•    more plantation timber coming on-stream, as FT’s sawlog plantings mature and new projects, such as Trees on Farms, are 
      implemented; and
•    changing consumer demand for engineered wood products over sawn timber.

The future of our industry lies not in our traditional product mix of sawn timber and woodchips, but in rotary peeled veneers, laminated veneer lumber, cross laminated timber, and renewable energy in the form of torrefied wood and wood pellets.

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

We are now finding new Chinese customers for our pulpwood logs and woodchips, with the ultimate aim of attracting investment in local processing.  Thanks to this work, I am pleased to report that our contractors have now ramped up activity to at or near 100 per cent capacity.

To read more about the Forestry Innovation Plan. (click here).

The 2010/11 financial year saw signs of improved demand for Forestry Tasmania’s wood products. Both revenue and contractor activity increased as a result of sales to Chinese customers.

We recorded an upturn in sales revenue to $156.5 million, compared with $135 million the previous year partly as a result of increased forest product sales. Consequently 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, notably, the closure of the Triabunna woodchip mill, which had a particularly detrimental impact on our operating result.

In light of these issues, we implemented tight cost control measures, including staff reductions, which contained our operating loss after tax before other items to $12 million.  On the same reporting basis, this is an improved result compared with 2009/10.

Any analysis of our trading result should include consideration of our wider contribution to the Tasmanian economy, which the Auditor General recently calculated to be $111 million annually.

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

While we do not take this result lightly, we have moved on from the transitions of the 2010/11 trading year.  We have confidence, and the expertise, to capitalise on the growing demand for Tasmanian timber in new markets.
To view financial report appendix (click here).

In other news, there was plenty of media coverage of the results of a study we commissioned CSIRO to undertake into the impacts of our regeneration burning program. (read more)
A reminder, there’s only a few more days to get your applications in for Community Assist - a joint program between Forestry Tasmania and Southern Cross Media which aims to assist individuals and organisations endeavouring to make their communities better places to live. Applications close Aug 31. (read more)
Is it time for you and your family to take another look at the Tahune AirWalk? Under Roland Schibig’s leadership, the site has never looked so good. Last week, more than 400 school children visited Tahune as part of National Science Week and from all reports, they had a ball. (click here). By the way, you can now stay overnight at the AirWalk Lodge, and there’s even the opportunity to take a night walk over the Airwalk.
And continuing the theme of things to do over the approaching school holidays, mark out  Thurs Sept 15  in your diaries. As part of our celebrations for the International Year of Forests, FT will provide a great day of fun, educational and free activities for the family in the 'forest in the city'. Some of the highlights will include abseiling, face painting, badge making, give aways, photos with Krusty the GIANT burrowing crayfish and be sure to say 'hi' to Shannon and ask her about the best 52 places to visit on state forest. (read more)
Also for the diary, our next Forestry Talk, the 71st since the series began in February 2004 will feature Aiden Flanagan from the Forests and Forest Industry Council discussing the impacts on S.E Asia's forests from Australian government policies on native forest harvesting (read more)

Until next time,

Bob Gordon

Managing Director
Forestry Tasmania

235 8225



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