KEY POINTS:
Vector
Electricity distributor Vector has reported a net profit up 18.4 per cent to $39.6 million for the nine months ended March 31. There was a strong performance across its businesses, with all maintaining earnings contributions ahead of the previous corresponding period. The results also reflect major new natural gas sales contracts and the return to colder winter weather after the warm winter of 2005. Vector is at the stable end of the energy business, supplying electricity through its network. However, the company is not without risk, illustrated last August when the Commerce Commission threatened to take control of Vector if it did not correct a policy of overcharging commercial customers and undercharging residential consumers. In December, three independent directors walked out complaining about the management style of the chairman, Michael Stiassny. However, the business is a monopoly that largely looks after itself and appeals for its reliable dividends.
Gunns
Timber giant Gunns has launched a A$332 million ($374 million) bid to take over softwood producer Auspine. Gunns will make an off-market bid for the remaining Auspine shares. The move would increase the size of Gunns by a quarter and expand its activities beyond Tasmania. Auspine has about 46,000ha of pine plantations. It will help Gunns broaden its product range, particularly in solid-wood products. Gunns has been one of the weaker performers on the Australian sharemarket. To the usual risks of forestry and commodity prices, it has added a running battle with greenies over the cutting of native forests in Tasmania. But the shares have bounced back sharply off the low point last year as the fundamentals of its business improve. Expectations are strong that Gunns will improve its bottom line over the next two years.
* Views expressed in this article are those of IRG, not the Weekend Herald