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Enacy Mapakame Business Reporter
Border Timbers Limited is expecting growth in export earnings driven by rural electrification programmes across the Southern African Development Community (SADC) region where sales volumes for poles are projected to spike.
Countries like Botswana, Mozambique and Zambia are expected to experience solid demand for the timber poles, a segment that could drive growth in export volumes for the company.
The company is also targeting these countries for lumber sales, as part of efforts to further increase export earnings.
“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 development projects are attracting financial support.
“We forecast pole sales performance to be bolstered by Mozambique, Botswana, Zambia as well as the local market,” said chairman Mr Elias Hwema in an update for the year to June 30, 2022.
Border Timbers was placed under voluntary provisional judicial management in 2015 and subsequently put 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.
Management said its recapitalisation remained a key priority with the replanting programme already on course to reduce the unplanted area to the industry standard of 5 percent in the next three years.
Mr Hwema said: “The company is in the process of recapitalising its two sawmills with the latest milling technology and commissioning of the new machinery is expected by the end of FY2023.
“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.”
According to Mr Hwema, the outsourcing strategy on harvesting continues to stabilise the sawmills log supply, which resulted in high plant capacity utilisation. All logs supplied to the processing plants were from the company’s own plantations with no external logs purchased.
During the year to June 30, 2022, lumber production volume 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 Mr Hwema.
Border Timbers has also 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 when 27 hectares were lost.
To reduce the risk, the company has further strengthened its plantation patrol teams, and community engagement programmes 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 $3,62billion 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.
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