Business Description:
Gunns Limited (GNS) is a Tasmanian based, fully integrated hardwood forest products company and is Australia's largest forestry company. Operations are based on state government owned hardwood forests and company and third party owned plantations. GNS is one of the largest suppliers of hardwood woodchip to Asian pulp mills with Japanese mills accounting for over 60% of all woodchip exports.

Strategy Analysis:
GNS´ strategy is focused on the development as a manager and processor of plantation wood products. GNS owns over 250,000 hectares of freehold land and manages 339,000 hectares of plantations. As one of the world's largest suppliers of hardwood woodchip to Asian pulp mills GNS plans to build a major pulp mill at Bell Bay in Tasmania using domestic woodchip as feedstock and export value-added pulp into the global market. GNS aims to leverage off its growing plantation pulpwood assets under management and its strategic location to Asian markets relative to alternative sources of wood fibre. The company is transitioning forest operations to a plantation only base. Longer term should the Bell Bay pulp mill become a reality GNS should be ideally placed to benefit from the increase in global pulp demand. Gunns reported a net loss of $4.65m for the half-year ended 31 December 2010. Revenues from ordinary activities were $363.43m, up 11.5% from the same period last year. Basic EPS was (1.1) cents compared to (0.4) cents last year. Net operating cash flow was $6.49m compared to $19.29m last year. No dividend was declared. The company reported that market conditions for the wood fibre business are expected to remain difficult while the strength of the Australian currency against the US dollar is maintained. Earnings from sawn timber operations are expected to increase in the second half of the 2011 financial year, with the integration of the Tasmanian softwood operations to one site at Bell Bay and further rationalisation of hardwood operations.