15/08/2006 - 22:00

ITC planning a return to growth

15/08/2006 - 22:00

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Futuris subsidiary Integrated Tree Cropping has outlined plans to regain market share in the managed investments sector after a poor sales performance last financial year.

ITC planning a return to growth

Futuris subsidiary Integrated Tree Cropping has outlined plans to regain market share in the managed investments sector after a poor sales performance last financial year.

ITC’s recently appointed chief executive, Vince Erasmus, has also committed the group to maintaining its focus on the timber industry, in contrast to groups such as Great Southern Plantations and Timbercorp, which have diversified into horticulture, olives, viticulture and other sectors.

Speaking after the release of Futuris’ annual profit, Mr Erasmus acknowledged ITC’s overall MIS sales, which fell to $47 million from $83 million in the previous year, were disappointing.

The main reason was a 65 per cent fall in sales of its pulpwood project to just $24 million.

This occurred despite national sales of MIS timber projects totalling nearly $700 million, according to Australian Agribusiness Group.

Market leader Great Southern accounted for nearly half of the national total.

Mr Erasmus said ITC’s 2006 project was not the best product in the market, as evidenced by its low rating from independent research houses.

“We probably just misread the market,” he told WA Business News.

The 2007 project will be designed to deliver better returns to investors and will be modified so that investors will make a lower up-front contribution.

“We’re confident that when the advisers calculate the returns they will be very happy,”  Mr Erasmus said.

ITC believes another problem last year was that the pulpwood product was late to the market.

Mr Erasmus said the group expected to address this problem by releasing all of its 2007 MIS products prior to Christmas.

He said ITC did not have large teams of business development managers working with financial planners like some of its rivals and therefore relied on its products obtaining superior research ratings.

He was heartened by the sales of its three other specialty timber projects, which increased to $23 million last year.

Within this total, sales of its sandalwood project in the Ord River irrigation area dropped to $12.4 million, notably less than its direct competitor TFS Corporation, which lifted sales to $19.8 million.

However ITC achieved what it called “promising” sales of its two new products – teak and red mahogany – which are grown in Queensland.

Another innovation planned for 2007 is the introduction of a diversified forestry product that will give investors exposure to the four different timber species through a single investment.

In terms of future plantings, ITC expects most of its pulpwood will be planted around Esperance and also Mackay in Queensland.

This marks a change from its early plantings, which were around Albany and Bunbury.

Mr Erasmus said the new locations were more attractive than the South West of WA, where land was more expensive.

Commenting on the group’s overall strategy, he said ITC believed its future was as an integrated forest products company that used MIS as a fund-raising tool, rather than being a dedicated MIS promoter.

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