Forest company Gunns has revised its full year earnings guidance downwards, blaming the strong dollar and the new Tasmanian forest agreement.
Gunns said this morning it now expected earnings before tax (EBIT) in 2010/11 would be $40-50 million, down from earlier guidance of $50-60 million provided in August.
The company's shares dropped 5.5 cents to 67.5 cents in early trade.
‘‘Although we acknowledge that the full year guidance is a wide range, timing uncertainty around significant potential developments across our business in what is a year of transition precludes a more precise forecast,’’ Gunns said in a statement released to the market.
Gunns attributed the earnings downgrade to a range of factors, particularly constraints on woodchip exports stemming from the high Australian dollar and the requirements of the Tasmanian forests deal.
‘‘The strength of the Australian dollar versus the US dollar has significantly impacted the competitiveness of hardwood chip exports into our key markets of China and Japan,’’ Gunns said. ‘‘Japanese demand in particular remains depressed.
‘‘We do not expect any currency relief in the period to June 2011 and have adjusted our forecast accordingly.’’
AAP