Another one bites the dust. Yesterday Futuris CEO Les Wozniczka delivered a profit downgrade and today Futuris is looking for a new CEO.

Chairman Stephen Gerlach announced he and Les “had discussions” and “Les has come to the view, and the board agrees with him, that it is time for a new leader to drive that process.”

There are a number of reasons for chopping Wozniczka but the final straw, or perhaps twig, seems to have been the dive in the 30 June business of flogging tax deductions, sometimes called timber managed investment schemes.

Who needs to buy a tax deduction disguised as an average to poorly performing MIS when the stockmarket has been handing out plenty of capital losses? Nothing like losing money to reduce your tax bill.

Observers of this controversial sector have seen plenty of share prices severely lopped lately — Great Southern shares for example have halved this month — and it appears to be for good reason.

Wozniczka provides some telling insights into the timber MIS industry in an open briefing filed with the ASX yesterday. Must have been done just before the chairman dropped in for that chat.

Firstly, Wozza forecast EBIT from Futuris’ MIS business, ITC, to be about the same as last year — $57 million. But it’s only being maintained by a higher woodchip price and an extra $5 million from land revaluations and SGARA calculations (basically, the accounting treatment of revaluing self-generating and regenerating assets). No, MIS sales aren’t going well as the June 30 deadline approaches.

Wozniczka was asked why ITC was lagging when some other MIS floggers have reported increased sales. Replied Les:

This year’s MIS product from ITC is more highly rated than in previous years and is one of the most highly rated in the market. Feedback we have had is that notwithstanding our ratings, this year has seen increased competition from “low-doc” and “no-doc” packages. Sales can also be highly sensitive to commissions paid. ITC has a conservative policy in relation to the financing of MIS investment, with the result that it has had minimal defaults from investors/borrowers. ITC has not moved away from rigorous application of its policy.

Oh dear. Les seems to be saying that a fair whack of the MIS industry is just as bad as everyone without a vested interest has long suspected. Nice to see the criticism and hints of further trouble coming from someone on the inside.

Just two weeks ago, Les was saying timber would replace grain as Australia’s main rural export earner. Let them eat wood.

Futuris shares have bounced 23% this morning to $1.19, running at one stage to $1.29. Looks like Wozza is not being missed already.

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Peter Fray
Peter Fray
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