A tough trading environment damages chipmill’s bottom line

Eden-based woodchip exporter South East Fibre Exports (SEFE) has confirmed that export market conditions remain difficult in the wake of criticism of their 2011 year operating loss and future prospects by local anti-forest industry lobbyists.

In its financial statement to the Australian Securities and Investments Commission (ASIC) released last week, South East Fibre Exports (SEFE) disclosed a loss of $126,430 for 2011.

Forest activist group, Chipstop, seized upon the information proclaiming that SEFE was in the red and questioned the viability of its future operations.

“SEFE is still exporting near record levels of woodchips, almost a million tonnes a year, but it cannot make a profit,” said Chipstop convenor Harriet Swift

“The destruction of forest and wildlife necessary to achieve that export figure is immeasurable.

“It is astounding that after exporting 922,551 tonnes of chips, a figure exceeded only four times in the past 15 years, they could not break even.”

SEFE Corporate Affairs manager Vince Phillips said that market conditions are by far the most challenging that the company has experienced in 35 years but consistent with similar challenges facing many exporters all over Australia.

Mr Phillips said that a combination of lower cost new Asian based suppliers in Vietnam and Thailand combined with the very high value of the Australian dollar and steep rises in shipping costs were combining to make trading conditions extremely tough and impacting significantly on bottom line outcomes.

He added that the aftermath of the global financial crisis and the ongoing effects of the major Japanese earthquake and tsunami were also key factors in creating a form of perfect storm in export markets.

“Unless you are in the top end of the mining boom,” said Mr Phillips, “it seems to be pretty general that exchange rate impacts and market disruptions are widespread and SEFE is very much affected by those sorts of things in woodchip markets.

“We are fortunate to enjoy the continuing support of our shareholders, we have no debt and strong reserves, we are very aware of continuing growth in global pulp and paper markets and we are attempting to pursue all opportunities that present to us.”

Mr Phillips said that SEFE expected the tough conditions to continue for some time and that the company would continue to play the most positive role it could in the local industry and to support industry partners to the greatest degree possible within market condition outcomes.

“We got through the recession we had to have, we have not been surprised by most of what has happened in the past 18 months or so given the scale of events and we expect to find a way forward in exports markets in the future,” he said.

Ms Swift said the company’s financial statements also reveal that SEFE is paying less for its raw materials.

“This shows that the public are still subsidising low log prices for the woodchipping industry.

“This week’s devastating result for the Nippon Paper subsidiary comes only days after a Parliamentary Question revealed that Forests NSW is also making a loss in its Southern Region,” Ms Swift said.

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