The receiver of Southern Cross Forest Products plans to cut 79 New Zealand jobs and wind up the company’s unprofitable Australian unit as it continues to search for a buyer for the failed business.
A fire at the company’s Mosgiel mill, near Dunedin on the South Island, cut drying capacity, reducing the abilty to process timber, KordaMentha’s Brendon Gibson said.
To stabilise productivity across the group the receiver will close the company’s sawmill at Rosebank, and 79 jobs will be lost across South Cross Forest’s South Island sites.
The restructuring in the South Island does not affect Thames plants.
“It is no secret that the company has long struggled to secure sufficient log supplies to feed its South Island mills,” Mr Gibson said.
“That issue has continued to compromise trading in the receivership, but performance has now been further affected with fire damage at the Mosgiel mill.”
More than 40 sawmills have shut in the past decade, and local wood processors have had to compete for supply with global demand pushing up raw log prices.
Mr Gibson said South Cross Forest’s unprofitable Australian business will also be wound down, and he is exploring options to realise the investment in that business.
“Our focus remains on trying to sell Southern Cross Forest Products as a going concern,” Mr Gibson said.
The company narrowed its annual loss to $NZ1.58 million ($A1.48 million) in calendar 2012 from $NZ2.92m a year earlier, as it booked a $NZ2.34m gain on the value of a 2009 acquisition.
Revenue climbed 16 per cent to $NZ95m in 2012, though the gross margin was squeezed to 4.6 per cent from 8.6 per cent in 2011, as the cost of sales rose.