Australian timber industry facing $8bn deficit
Posted November 01, 2019 08:33:25 The world’s largest timber producer and retailer is facing $9.5 billion in losses this financial year, as it seeks to avoid a collapse of its business model.
The Australian National Timber Board (ANTB) said on Wednesday it had not yet completed the sale of the entire $8.3 billion timber market, which covers about 60 per cent of the country’s supply.
But it expects the loss of $7.4 billion in revenue from the business to be around $8 billion, or a loss of about 1 per cent.
Key points: ANTB said it had lost $7 billion in timber revenue in 2019 and has not yet finished the saleThe board has been struggling to find savings in the market since 2016The board had been struggling for more than a year to find the savings it needed to close a $10 billion budget deficit, which it had forecast would reach $13.7 billion by 2021-22.
But the ANTB has been forced to turn to a series of cash-strapped measures, including the sale and acquisition of assets.
This is the second time the board has made the decision to close the business.
In November 2016, it decided to exit the Australian market altogether.
“While we had hoped that this decision would help to drive the economy forward, it has not,” the board said in its statement.
“We remain committed to maintaining the industry’s strong, competitive position in Australia.”
In 2018, ANTB cut $3.5 million in the budget to cover the loss, while in 2019 it reduced its annual spending to $3 million.
“It is our view that the continued loss of revenue from this business, combined with the lack of confidence in our financial position in the Australian timber market and its potential impact on the financial viability of the company, are driving our decision to sell,” the ANTSB said.
The board also said it was committed to finding savings of at least $5 billion by 2020, and to keeping the company profitable and strong.
But some investors are questioning whether the ANTs plans to sell off its timber business are enough to keep the company afloat.
“The company’s management is a little bit flaky, and its plans are not going to work,” said Mark Toner, chief executive of Australian Capital Group.
“This is not the right direction for the company.
It is the wrong direction for timber.”
Toner is one of the board members who are on a $4 million severance package, which is due to be paid on November 25.
“I would hope that the board will continue to do its due diligence, and it is certainly going to have to do a little more to be able to stay in business,” he said.
“And if it can’t, I think there’s going to be a real need for the government to intervene.”