Forest products help record earnings for Oregon Group
Friday 3 Nov 2017Oregon Group, which manages a New Zealand portfolio of businesses for Malaysia's Tiong family, expects record earnings in 2018 on rising prices for forest products and the completion of apartments in its land development unit.
Net profit fell to NZ$41 million in the year ended June 30 from NZ$95 million a year earlier, but managing director Thomas Song said that masks the underlying performance of the company. That's because income in 2016 was boosted by a NZ$124 million gain on the value of its forests, while the latest year had only three months of consolidated revenue from New Zealand King Salmon prior to the fish farmer's initial public offering in October 2016.
"2018 will be a record year as all forestry commodities have had a price upswing," Song said. "Land development will also assist with the expected completion of apartment building." The breakdown of revenue was NZ$343 million from forestry, NZ$97 million from land development, a three-month contribution of NZ$28 million from King Salmon and NZ$11 million from plastic and brushware manufacturing, Song said in an email.
Excluding a land purchase of about NZ$33 million operating cash flow was about NZ$3 million ahead of 2016. The company's 100,000-hectare forest estate was valued at NZ$774 million at June 30 from NZ$781 million a year earlier, accounting for more than half Oregon's NZ$1.41 billion of total assets. Oregon's NZ$88 million of carbon credits were valued at $17.20 per unit at the balance date, up from NZ$84.2 million at $17.85/unit price a year earlier.
Oregon tends to fly under the radar but it owns a range of high-profile businesses in New Zealand including the country's fourth-biggest forest estate, Ernslaw One and its subsidiary Winstone Pulp International, 40.2 percent of King Salmon, Innova Products - better known for its ClickClack kitchen storage products, and property development company The Neil Group.
It also owns 50 percent of a joint venture Edible Forest Fungi NZ, 29 percent of NZ Marine Hatcheries, which isn't currently trading, and 100 percent of Talus Industries NZ, a brush making and plastic moulding company that Oregon is winding up "because of ongoing losses". Notes to its accounts say most of the staff at Talus were made redundant in August and the sale of assets was expected to exceed the carrying value of the business.
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