Border Timbers recovers from loss
BORDER Timbers Limited (BTL) has overturned its loss-making position and posted a net profit before tax of $70,49 million for the three months ended September 30 2020, owing to an improvement in inflationary pressure.
The profit before tax was an improvement from a comparative loss of $88,51 million experienced in 2019.
During the three months under review, the annual inflation rate improved to 659% in September from 761% in August and 836% in July.
BTL has been under judicial management since 2016 after failing to service debts to several financial institutions worth US$20 million.
“The economic environment has been fairly stabilising since the introduction of the foreign currency auction system and this has seen some improvements in the macro-economic fundamentals. Generally, global economies experienced the devastating effects of COVID-19 pandemic which resulted in lockdown measures which affected both our local and export markets,” BTL judicial manager Peter Lewis Bailey said in a trading update for the threemonth period under review.
“The measures that were implemented by governments in the southern Africa regional export market, affected the business’s supply chain, resulting in reduction in aggregate demand and logistical bottlenecks. There has been an improvement in the inflationary pressure in the economy with the annual inflation rate dropping.”
The improvement in profit before tax for the period under review was recorded despite a drop in revenue for the period to $313,14 million from a 2019 comparative of $371,86 million.
For BTL, a forestry and saw-milling company, the revenue decline emanated from a fall in the sales volumes to 16 707 cubic metres for the period under review from a 2019 comparative of 18 973 cubic metres.
Production volumes also declined by 24% to 13 668 cubic metres for the period under review from 17 986 cubic metres in the comparative 2019 period.
In terms of sales, the decline in volumes resulted from a reduction in transmission poles and lumber to 2 775 and 13 933 cubic metres, respectively, from a 2019 comparative of 3 750 and 15 223 cubic metres.
Production volumes slumped to 2 130 and 11 539 cubic metres for transmission poles and lumber, respectively, from a 2019 comparative of 2 621 and 15 365 cubic metres.
In a year to date performance, Bailey said lumber production was lower compared to prior year due to disruptions in production and logistical bottlenecks that were caused by COVID-19 lockdown restrictions.
“Demand for lumber remains very high both in the local market and the export market, hence a significant positive movement is expected as the economies return to normalcy,” he said.
“Treated poles reflect a decline in production and sales volumes compared to prior year, this was because of lower demand during Q1 of FY20 and the adverse effect of the COVID-19.”
He said there had been no finalisation of ongoing discussions which would allow the firm to come out of judicial management.
“Discussions with the government will follow. Accordingly, the company will remain under judicial management for the foreseeable future,” Bailey added.
Going forward, BTL does not expect the COVID-19 pandemic to have a material adverse effect on Zimbabwe and other countries in the region in the foreseeable future.
“Though it remains uncertain as to when the pandemic will go away, the lockdown restrictions are being eased and the local and regional economies are already showing signs of recovery,” Bailey said.
“The company continues to be guided by the pronouncements from the World Health Organisation and the Ministry of Health and Child Care for measures that protect our staff and stakeholders.”