Business Reporter
AGRO-INDUSTRIAL concern Border Timbers said revenue for the half-year to June 30, 2016 rose 47 percent to $26 million compared to the same period last year on increased volumes and regional demand. But, the loss for the period widened to $24 million from $4 million after a fire outbreak which resulted in an asset write down of $16 million. A total of $10 million was lost due to fire outbreaks on plantations which affected mainly mature trees.
Border Timbers judicial manager Mr Peter Bailey said volumes increased on the back of resilient demand in transmission pole business in the SADC region. A slowdown in the Mozambican market together with the effects of the depreciating South African rand against the United States dollar had a knock on effect on the business.
The company also said plantation yields were slowed down following poor rains as a result of the El Nino induced drought, poor compartment stocking levels, impact of baboon damages and settler invasions.
However, these were offset by a steady pine products revenue as well as growth in local and Botswana markets. Treated poles production, which is the company’s cash cow, was up 59 percent compared to last year. “A boon in regional demand for treated poles saw the company clinching lucrative contracts that sustained cash generation of the business. The company’s pole order book remains full for the next 12 months,” said Mr Bailey.
Lumber production for the period under review was 11 percent up from prior year while sawmill average uptime was more than 90 percent. Finance costs were down 54 percent due to the successful loan restructuring exercise which resulted in better priced and longer tenure loans being negotiated. Selling and distribution costs increased 199 percent on freight cost on poles business into the region which was driven by increased volumes through-put and better control of the distribution channel.
Other operating expenses were down 76 percent due to non-recurring loss on disposal of property, plant and equipment included in prior year while administrative expenses were 11 percent higher on prior year levels. Although the depressed economic conditions are expected to remain in the near future, Mr Bailey said the company will continue to scout for new markets especially in West and Central Africa as part of efforts to increase market share in the region. “Concerted efforts for production and market diversification are underway with the view to expand revenue base.” The company did not declare a dividend.