JSE-listed York Timbers on Thursday posted lower earnings for the six-month period to December 31.
Headline earnings a share and earnings a share declined from 11c in the comparable prior period to 10c in the six months under review, while profit for the period was down from the R35.4-million posted for the first half of the 2016 financial year to R32.2-million in the first half of the current financial year.
Earnings before interest, taxes, depreciation and amortisation (Ebidta) increased 14% to R105.9-million on the back of improved average selling prices, while operating profit was down 4% to R66.1-million, owing to an increase in the plywood plant depreciation after commissioning.
Revenue increased 9% to R952.5-million in the six months to December despite the lumber industry declining 4.5% in the same period.
“This was attained through a dedicated focus on improving customer support and service. York increased its geographical footprint by opening new warehouse distribution facilities in provinces previously not covered directly,” York said in an update to shareholders.
The group’s processing division delivered an “outstanding performance”, as the capital expansion projects at the Sabie and Driekop sawmills were completed on time and below budget and are already contributing positively to the company.
“The capital investment projects at Nicholson and Mullin sawmill were completed in February. Process and productivity improvements embedded by Project Evolve continue to support processing efficiency,” York also pointed out.
In addition, the plywood plant reported a 35% increase in production volumes after the commissioning of the plant upgrade; however, with the optimisation and fine-tuning now being finalised, the expected revenue increase is lagging the incurred depreciation and interest charges.
York reported that the external log volumes acquired by the forestry division were 19% higher year-on-year, driven by increased intake at processing plants; however, with a 37%, or R43-million, surge in value reported, the price increases from South African Forestry Company had far outstripped inflation, which York was currently addressing with the supplier.
“Increased lead distances, as well as harvesting from own plantations being behind target resulted in the forestry division’s Ebitda being 40% lower than the prior period.
“Savings achieved through the mechanised harvesting insourcing project have contributed to overall profitability and, going forward, insourced opportunities relating to inbound logistics will further enhance long-term value,” York said.
Meanwhile, assisted by the opening of the new lumber and plywood distribution warehouses, the wholesale division grew market share.
During March, the first supply loads from the newly opened warehouse in Limpopo will ensure further volume growth is achieved in future.