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Logging in Australia: industry revenue will decline

  • abril 12, 2012
  • • Fuente: PRweb
  • • Vistas : 1098
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Australia's Logging industry plays an important role in downstream wood and paper products industries. According to IBISWorld industry analyst Alen Allday, “in the past five years, the industry has been affected by the construction cycle, which is one of the most important demand determinants for timber products.” Lower construction activity is expected to result in industry revenue declining an annualised 0.6% over the five years through 2011-12.

IBISWorld forecasts that during 2011-12, the Logging industry will generate revenue of $2.0 billion, a 0.4% increase from the previous year, and about 45% of revenue for the Forestry and Logging sector. “This increase will be the result of stronger log prices and a steady market for new housing,” says Allday. Profits are forecast to be flat in 2011-12 due to stable demand. Industry profit margins are estimated to have declined in the past five years due to higher raw material costs and wage costs, which were not quite offset by higher average volumes and generally increasing log prices. The Department of Agriculture, Fisheries and Forestry estimates that less than 1.0% of native forests are harvested for timber products each year and that plantation timber now accounts for the majority of removals. Plantation timber accounted for 68.6% of removals during 2007-08; this is estimated to improve to 70% in 2011-12. The Australian Bureau of Agricultural and Resource Economics and Sciences expects that it will take more than 20 years for plantation timber to meet the entire timber demand. As a result, native forest logging is expected to continue for many more years under stringent government regulation. In the five years through 2016-17, industry revenue is expected to increase. This low growth will be due to small general increases in log production and flat demand as housing construction activity cools.

Although there are a few vertically-integrated forest-product companies that operate in the Logging industry, there has been a rise in the importance of small, individual logging companies that are contracted by downstream forest product companies to carry out logging activities. The overall level of industry concentration is low. This low level of ownership concentration is partly the result of the wide geographic distribution of Australia's forests that are available for logging. The wide distribution has discouraged logging companies from investing in more than one or two states. The major players in the industry are Gunns and Hancock Victorian Plantations
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