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Forest NSW Annual Report 2012

Our financial performance Profitability analysis to mitigate the revenue shortfall which ■■ native forests; andreview of the north coast wood supply inForests NSW drove a number of cost initiatives Forests NSW faced a challenging year in 2011–12, resulted in the business returning an operating ■■ conclusion of non-commercial thinning of amidst market downturns and adverse weather profit before taxes of $14 million. Some of the white cypress in Western region of native conditions. Operating revenue of $318 million strategic initiatives which will assist the year forests. was $9 million lower than last year and almost ahead are: These initiatives combined with the decision to $40 million worse than budget expectations. ■■ closure and outsource of coastal corporatise Forests NSW are aimed to improve This was predominantly due to the continued mechanical workshops; the underlying profitability and commercial softening in the housing market which ■■ leasing of the retail nurseries; value of the business. significantly impacted softwoods sales. Volumes of softwood sawlogs were down on Key financial data last year by 195 000 m3 and worse than budget Year ended 30 June 2007–08 2008–09 2009–10 2010–11 2011–12 by 255 000 m3. Budget assumptions were Revenue1 $m 294 286 329 327 318 expecting the housing market to recover, which Operating profit1 $m 14 (16) 20 34 14 did not eventuate. More recently this situation EBIT1 $m 26 (4) 32 43 23 was exacerbated by imported wood products Dividend payable $m 1 0 10 14 5 taking market share from domestic producers, Borrowings $m 169 165 141 132 133 aided by the strength of the Australian dollar. Biological assets $m 625 670 662 751 734 The current market position also placed Key ratios significant commercial pressures on Return on assets % 0.8 (0.9) 1.1 1.8 0.7 log pricing, which, in turn, affected the EBIT margin1 % 8.7 (1.5) 9.7 13.2 7.3 underlying profitability. Additionally, the cost Liquidity ratio times 1.6 1.0 1.4 1.0 1.1 of harvest and haulage expenditure increased Debt ratio % 27.8 30.1 42.9 42.1 45.3 over last year with increases in fuel costs and Interest cover times 2.3 (0.3) 2.6 4.6 2.5 contractor expenses. 1 Excludes significant items such as revaluation impact, impairments and impact on superannuation funds, before taxes. 329 327 318 350 294 286 300 250 REVENUE 200 ($M) $318 million 50150100 0 2007–08 2008–09 2009–10 2010–11 2011–12 50 OPERATING PROFIT 34 35 $14 million 14 20 14 5 ($M)20 -10 (16) 2007–08 2008–09 2009–10 2010–11 2011–12 -25 16 Forests NSW Annual Report 2011–12 Social, Environmental and Economic Performance


Forest NSW Annual Report 2012
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