Border Timbers targets regional market
TIMBER producer — Border Timbers — is angling for increased export volumes with regional sales expected to be driven by poles segment.
This comes as governments in the SADC region are spearheading some rural electrification projects, which should see a spike in volumes for poles.
According to chairman Elias Hwema, countries like Botswana, Mozambique and Zambia are expected to experience a solid demand for the poles segment which will push export volumes for the company.
“Improved performance is anticipated in the poles business due to increased demand for the product in the SADC region where rural electrification projects and infrastructure developmental projects are attracting financial support.
“We forecast poles sales performance to be bolstered by the Mozambique, Botswana, Zambia as well as the local market,” said Hwema in the company’s 2022 annual report.
Border Timbers is targeting these countries for lumber sales, as part of efforts to further increase export earnings.
Hwema added the group is also prioritising recapitalisation of its replanting programme, which is already on course to reduce the unplanted area to industry standard of 5 percent in the next three years.
This is in addition to recapitalising its two Sawmills with the latest milling technology and commissioning of the new machinery expected by the end of FY2023.
Border Timbers was placed under voluntary provisional judicial management in 2015 and subsequently into final judicial management in 2016. Following approval by the shareholders in January 2022, and the subsequent approval by the High Court in March 2022, the company exited judicial management.
“The board of directors remains committed to its strategy of delivering value for all stakeholders. We believe that the fundamentals in the business remain intact, with healthy forests, a talented and experienced management team, and workforce to support the strategy.
“The company’s product quality remains highly regarded in the market and the current marketing efforts will increase demand for the company’s kiln dried timber,” said Hwema.
Meanwhile, lumber production volume for the year to June 30, 2022, was 43 930 cubic metres, which was 4 percent lower than prior period, driven by low customer demand during the period under review.
Lumber sales volume was 43 120 cubic metres from 49 047 cubic metres and the reduction was mainly because of lower aggregate demand primarily in the local market.
During the period under review, 713 hectares were planted, which was more than double the 341 hectares planted in the prior year.
“The company is focusing more on improving the biological asset, applying best practices, and improving planting methods,” said Hwema.
Border Timbers has lamented the plantation fire damage which remains the major business risk, particularly arson. During the year, the company lost 235 hectares which is significant compared to the previous period where 27 hectares were lost. To reduce the risk, the company has further strengthened its plantation patrol teams, community engagement programs and acquired new fire fighting equipment.
During the year under review, treated poles sales volume was 10 169 cubic metres which was a 7,4 percent improvement from the prior year.
In terms of financial performance, revenue for the period rose 11 percent to $4,79 billion primarily driven by consistent product quality of the kiln dried timber resulting in better average selling prices.
Operating expenses were 85 percent higher as compared to the previous period mainly driven by inflationary pressures, however, management continues to implement measures to contain costs.
Net profit before taxation was $3,62 billion from a loss position of $5,59 billion while cash generated from operating activities was $1,05 billion, a 12 percent improvement from prior year.