Forest purchases boost Sumitomo profit
NELSON: Sumitomo Forestry NZ, the local unit of the Japanese timber conglomerate, posted a record profit last year, after buying the timber plantations of US forestry investor Hancock in 2016 to secure more supply for its wood processing plant.
The timber company posted a profit of $48.9 million in the year ended December 31, from a loss of $18.4 million a year earlier when its earnings were hurt by a $62 million reduction in the value of its plantations, according to its latest financial accounts.
Sumitomo’s 2016 accounts included nine months of contribution from Hancock’s Tasman pine forests which it bought for $369 million. Sumitomo’s New Zealand forests were valued at about $310 million in 2017, up from $296 million in 2016 and just $24 million in 2015, its accounts showed.
Sumitomo set up wood processor Nelson Pine Industries out side Richmond, near Nelson, some three decades ago. The plant is one of the world’s largest singlesite mediumdensity fibreboard (MDF) makers. Most of its production is exported under the GoldenEdge brand, and it also manufactures laminated veneer lumber (LVL). The company already had about 5000ha of forest and the Hancock purchase gave it freehold interest in about 20,437ha of forest land and leasehold interest in about 155ha in the NelsonTasman region.
Securing supply of wood helped shore up Sumitomo’s investment in manufacturing at a time when increased demand from China has been pushing up the price of logs and prompting many forest owners to ship their raw logs to Asia’s largest economy.
The company’s New Zealand unit did not pay a dividend to its parent this year, or last year, according to its accounts. They show the last dividend payment of $46.5 million was in the 2015 financial year. — BusinessDesk