Gunns takes hit in annual profits

Updated: 10:31, Monday August 16, 2010

Gunns Ltd says it will post a 50 per cent drop in annual net profit due to impairments.

The woodchipper said on Monday it had completed a review of the carrying value of some of its assets, and it expects to book a $98.1 million impairment charge for the year to June 30.

It will also post an annual net profit of $28 million, according to preliminary and unaudited figures.

That is down from $56.24 million in the 2008/09 financial year.

Underlying earnings before interest and tax will be $52.2 million, within Gunns’ guidance.

The full details of the impairments will be released on Wednesday with the final annual financial results, Gunns said.

‘They principally relate to the write down of non-core assets and businesses that have been or are being prepared for sale or closure and the adoption of policy decisions in relation to the carrying value of deferred lease and management receivables in relation to various MIS (managed investment scheme) schemes,’ Gunns said in a statement.

Meanwhile, Gunns’ Tamar Ridge wine business will be sold to Brown Brothers Milawa Vineyards for $32.5 million, subject to completion adjustments.

The transaction is expected to be completed by August 31, and involves the sale of all of Gunns wine interests including vineyard management of winegrape MIS projects.

‘The sale to Brown Brothers continues the process of focusing Gunns on its core plantation and processing-based operations, while at the same time providing a growth path for the wine business,’ Gunns chief executive Greg L’Estrange said in a statement.

‘We are confident the development of the Tamar Ridge wine business will continue under Brown Brothers ownership, providing further opportunities for its employees