Timbercorp shelves plans for the creation of a fund management arm.
Agricultural investment company Timbercorp has halted its plans to create a funds management division, after the company reported a fall in net profit of over 32 per cent to $44.6 million.
In December last year, Timbercorp announced plans to team up with a global investment bank to develop products for investment in agribusiness, water and carbon projects.
It had already applied to ASIC for a dealer's licence.
But its plans have been postponed as a result of the challenging market conditions.
Profits were hit by provisions and write-offs, while borrowing costs have gone up and the value of its agricultural assets has increased less than anticipated.
The company will now look at restructuring its business, and plans to exit the managed investment market (MIS) to focus on revenues from rent, management fees and finance income.
These revenues made up $321 million of the $494 million in total revenues over 2008.
"While the decision to step out of the MIS market in 2009 would significantly reduce earnings in 2009, we expect strong earnings growth from 2010 before allowing for any revenue from new sales," Timbercorp chief executive Sol Rabinowicz said.
To reduce debt, Timbercorp will sell and lease back around $280 million of forestry land and $200 million of horticultural assets.
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