Australian timber firm Auspine Ltd has seen increased demand for its structural timber products, leading it to state that the company’s EBITDA for 2008 will be A$24m.
In an announcement to the Australian Stock Exchange, the directors of Auspine said that the company had “produced unsatisfactory returns” over the five years to 2007, but noted that housing demand and prices are likely to rise over the next few years.
An earlier target statement, released on July 12 by Auspine as part of its ongoing takeover struggle with Gunns Ltd, noted that housing starts were likely to increase from 149,000 to 167,000 between 2007-2009, but the domestic timber market outlook published on July 24 estimated that starts will rise from 155,000 in 2007 to 182,000 in 2008 and climb even further in 2009.
Using the original projection, an independent report by Lonergan Edwards & Associates Ltd found that Auspine’s wood products businesses had an EBITDA of A$21m in the five years to 2007 and taking into account the budget for 2008, valuing the company’s shares at between A$6.21 and A$6.79.
However, with the news that Auspine is expecting housing starts to be higher than first thought, its directors have said that that company’s share price will increase by 39-42 cents.
Auspine’s outlook for its wood product businesses over the next two years is unlikely to hasten the resolution of Gunns attempt to take over the firm, which could see an independent arbiter intervene after Gunns requested that the Takeover Panel reviewed its A$6.15 per share offer.
