Property sale allows Safcol to post profit
Minister wants new plan SAFCOL delivered a net profit of R70 million for 2012/13 but the management of the stateowned forestry company acknowledged yesterday that this amount was attributable to the sale of a property in Mpumalanga, otherwise it would have made a loss.
At a press conference in Cape Town, Nomkhita Mona, who was appointed chief executive late last year, said that a property had been sold in Mpumalanga, which had put the company in the black.
Public Enterprises Minister Malusi Gigaba has asked Safcol management to come up with a new business plan to find new lines of business and markets for the company, which he admitted was under pressure.
“As you are aware, due to the global economic challenges, the industry has been faced with increasing challenges as a result of subdued demand and… household consumption, especially from the traditional markets, the US and the EU,” the minister said.
Safcol’s performance, he said, had declined “on an average of 11 percent [a year] over the past five years”.
“The company must become innovative,” he said, noting that the supply of biofuels and biomass to SAA and Eskom were two areas of potential growth for the company, which has focused in the past on the lumber industry.
“I have directed that the company should… in terms of its future role… develop alternative products and explore other international markets and leverage its world-class management and products.”
Gigaba said he had established a task team consisting of staff from his department, the Department of Agriculture, Forestry and Fisheries, the Treasury, “and others” to review the future role of Safcol “in its institutional form”.
Asked whether there was room for privatisation, Gigaba said restructuring – as privatisation had been called – had been dumped nearly 10 years ago. “Whilst there was a decision [that] we should privatise not only Safcol and a number of the other state-owned companies, government turned its back on it that programme.”
He explained that there had been public pressure and pressure from unions, while the government itself had “changed its opinion on a number of issues”. It was decided that some of these public enterprises needed to play a developmental role. He believed this role should extend to the support of enterprise development in rural areas “targeting women and young people”.
“As we sit we have no mandate to privatise Safcol. We are looking at ensuring that the company plays its role as a state-owned company until such time we are told… ‘you need to pursue privatisation’.”
Asked why there had been no business plan before, Veronica Nomfanelo Magwentshu, Safcol’s chairwoman, said it was “not as if we don’t have a corporate plan”, but the minister had instructed the entity to develop “a different business model” otherwise the entity would not be sustainable going forward.
While the annual report could not be presented to journalists as it has not been tabled in Parliament, Mona said that the company sold 1.07 million cubic metres of logs in the 2013 financial year, which represented a decline of 3 percent on the previous year.
The firm had 18 forestry plantations “across the country” and employed 4 000 people directly and supported about 20 000 people in all, she said.
The 2011/12 report recorded improved results compared with the previous two financial years. It recorded an operating profit of R51m compared with an operating loss of R32m in the previous year.
Chief financial officer Maureen Manyama-Matome reported then that the trend for revenue over the previous five years had been upward – except for 2010 and 2011 when the economic environment “was not conducive”.