York Timber Holding's headline earnings a share shot up to 14.31 cents in the six months to December 31 from 4.67 cents a year before, as the turnaround plan gained further traction,
The share price had gained 4.95% to R2.12 by midday Monday. Revenue grew by 18% to R1.04 billion, and EBITDA (earnings before interest, tax, depreciation and amortisation) improved to R84.3 million from R8.3m.
The higher EBITDA contributed to improved cash generated from operations of R45.7m, compared to cash used by operations of R7.8m for the period ended December 31, 2023. No interim dividend was declared.
Operating expenses were in line with the prior period, and the cost of sales increased in line with the increase in revenue.
Lumber prices continue to increase, albeit below inflation. However, industry sales volumes had increased by 3% annualised, and industry stocks were falling.
“These are positive signs for sales price recovery over the medium term as well as sustained demand,” CEO Gabriel Stoltz said in a statement.
Operational improvements saw lumber production volumes increase 8%. Plywood production volumes increased by 19% due to better efficiency and benefits from capital expenditure.
However, plywood pricing fell, negatively impacting profitability. The increased plywood production was met with soft demand in the domestic market, where sales volumes fell by 3%. Conversely, export volumes increased by 73%.
Although the increase was encouraging, the European and United Kingdom demand remained flat. Plywood production volumes exceeded sales, resulting in higher stock levels. Working capital increased by 20%, with plywood stock holding increasing by R29m.
The Processing segment reported a loss of R5m, compared to a profit of R5.9m in the same period last year. The Sabie sawmill incurred significant losses due to low lumber prices and higher costs. Action plans to return the mill to break-even were not expected to be completed this year.
The Forestry and Fleet division generated a profit of R66m against a corresponding loss of R9.2m, the result of the continued early clearfelling of Pinus taeda trees.
The closure of loss-making business units was completed through the sixmonths, the last of which related to the Stadsrivier Hout sawmill and pallet plant. Stadsrivier Boerderij contributed R9.1m to EBITDA with the first citrus harvest in the current period.
Stoltz said they expect some recovery in lumber pricing, but the first bid round of the South African Forestry Company Limited’s log prices exceeded inflation. This, along with Eskom’s tariff increases from April 2025, would partially offset this recovery.
“We will focus on returning our plywood stock to acceptable levels by increasing our export program through sales to New Zealand and Australia. Plywood pricing is expected to remain at subdued levels and fluctuate due to changes in exchange rates,” said Stoltz.
Business Report