Leading Australian integrated forestry company Gunns Ltd has seen its half-year net profits plummet to just A$400,000 due to challenging trading conditions.

Its net profits a year ago were A$33.6m. However, chairman John Gay said he expected improvements in key markets to result in a better second-half result.

Gunns’ timber products division saw its profits grow during the period to A$5.5m and sales rise by 2% to A$127.7m. Trading conditions gradually improved through the half-year.

The group has also announced a strategic review to reshape the company to realise asset value and participate in growth opportunities. This will include establishing a stand-alone timber processing business to build on the merged Gunns, Auspine and ITC operations.

The group acquired the hardwood timber business of ITC Timber Pty Ltd last December for A$88.5m, with milling and processing operations in Victoria. Gunns says the acquisition, which it hopes to realise A$20m annualised savings from, has created a business with significant scale and a distribution footprint across Australia and South-east Asia.