Gunns hit by write-downs

Gunns reported a $355.5 million net loss largely due to heavy write-downs and impairment charges during an asset-value review, which drove the company into a loss for the year.

The company took impairment charges including $218.1 million against Auspine, a 19% reduction in the value of its Tasmanian forest assets to $406 million, and about $77 million in provisions related to managed investment scheme assets.

The $355.5 million loss follows a 2010 profit of $28.5 million, showing a significant swing from profit to large net loss year‑on‑year.

Gunns is undergoing a strategic restructure to exit native forests and sell a series of assets as it shifts to a plantation‑based business model; the change is intended to support its longer‑term plans.

The planned $2.3 billion Tamar pulp mill is the intended long‑term focus for the plantation‑based business: Gunns says the plantation shift will eventually feed the planned pulp mill.

Gunns’ shares were in a trading halt for a third week at 20.5 as the company negotiates a settlement with the Tasmanian government over exiting contracts tied to public native forests.

Managing director Greg L'Estrange described Gunns as a business in transition, reflecting the strategic changes and the recent asset write‑downs that produced the large loss.

Investors should note the material impact of large impairment charges and provisions, the strategic move from native forests to plantations to support the Tamar pulp mill, and the ongoing trading halt and negotiations with the Tasmanian government—factors that are central to Gunns’ near‑term outlook according to the article.