Border Timbers expect its financial situation to significantly improve
BUSINESS REPORTER
Border Timbers Limited is anticipating a significant improvement in its financial situation in the near future due to a rise in pole demand in the SADC region.
It follows a year in which the business experienced a swing from a profit of US$12.65m in 2022 to a loss of US$1.526m this year as a result of high operating costs and exchange rate losses.
“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,” Border Timbers chairman Elias Hwenga said in a statement accompanying the full year results.
He added: “Market development remains a key focus of our poles business as the company is actively pursuing new opportunities in the local market as well as in the region and beyond. The company currently has a healthy order book with potential to sustain our poles sales target for the next two financial years.”
Revenue for the group increased to US$15.8m in the period under review from US$12m reported in the prior comparative period, reflecting a 23% increase, primarily driven by improved product mix and consistent product quality of the Kiln Dried Timber resulting in better average selling prices.
Despite the loss, the company’s balance sheet remains very strong with a solid asset base supported by both the biological assets and property, plant and equipment.
Hwenga said harvesting operations performed very well with the plant optimisation broadly on plan.
But the lumber sales volume was 38 792m3 from 43 120m3 the previous comparable period and the 10% reduction was mainly because of lower aggregate demand, primarily in the local market.
“Efforts are underway to expand the export market base with a focus on markets with better average selling prices,” Hwenga said.
During the period under review, 1,327 hectares were planted against 713 hectares showing significant improvement compared to prior year.
Hwenga said the company is focusing more on improving the biological asset, applying best practices, and improving planting methods.
Border Timbers said it is mindful of the impact of climate change on the planet and is adapting and conducting its operations in a way that is environmentally friendly.
This consciousness resulted in the Company attaining Forest Steward Council (FSC) certification on all the estates except for Tilbury Estate and, plans are underway to have Tilbury Estate certification by the end of FY2024.
“A total of 6 400 hectares of Tilbury Estate has been set aside for the Biomass establishment in partnership with two Tobacco Companies. Funding for the project has been secured and this is expected to further strengthen the company’s biological asset, at the same time supporting tobacco production with a sustainable source of energy for tobacco curing,” Hwenga said.
He said plantation fire damage remains the major business risk, particularly arson and during the year, the company lost 327 hectares against 235 hectares in 2022.
As a result, the company has further strengthened its plantation patrol teams, community engagement programmes and acquired new firefighting equipment.
