The sale of BORAL’s hardwood business, which is now being sought according to a report in the Australian Financial Review (21 Jan 2015) could provide a safety net for coastal hardwood forests in NSW, and the Koala and other unique native fauna that live within them, NEFA spokesperson, Mr John Corkill said today.
BORAL chief Mike Kane is reported to have said last year that the timber business, which provides decking and flooring, was under review.
“Boral has persisted with a flawed business model for far too long,” said Mr Corkill.
“The blackbutt timber they require for most of their flooring and decking is just not available in sustainable quantities and they have been told that for over twenty years.
“The market into which they are trying to sell their flooring and decking is oversupplied with alternative products -most of which are significantly cheaper than BORAL’S solid hardwood line.
“The third factor is that the industry has relied too long on government handouts, even receiving $8m last year from the NSW Government for not cutting timber, and these subsidies cannot be guaranteed to continue indefinitely,” he said.
A further chop was made in BORAL's business model when, in 2014 They lost their Japanese woodchip market because they could not get the Forest Stewardship Council 's environmental certification for their North Coast hardwood logging practices.
“These factors are long-term and largely independent of economic cycles,” said Mr Corkll.
Boral's asking price for the hardwood timber business of $100m, was characterised by the Australian Financial Review as being optimistic.
The Australian Financial Review reported that there are few logical buyers for the asset, which Boral has wanted to be rid of for some time."
Australian Financial Review article
Boral’s hardwood on block
PUBLISHED: 21 Jan 2015 01:02:01 | UPDATED: 21 Jan 2015 01:02:01
Edited by Sarah Thompson, Anthony Macdonald and Jake Mitchell
Corporate advisory Gresham has been charged with finding a buyer for Boral’s hardwood timber business as the construction materials group continues to reshape its building products portfolio.
Boral chief Mike Kane said last year that the timber business, which provides decking and flooring, was under review.
It is understood the division generates revenue of around $80 million and earnings in the order of $10 million. Boral does not break out the business separately in its accounts but the timber division has a book value of around $100 million.
Sources said if it does sell, it is likely to be at a price below book value. There are few logical buyers for the asset, which Boral has wanted to be rid of for some time.
While it is a tough business to sell, Gresham’s job could be made easier by the recent fall in the Australian dollar, which will ease some of the pressure Boral timber faces from import competition.'