By opening up new market channels, strengthening its wholesale division and focusing on service delivery to its existing client base, JSE-listed York Timbers has achieved a 22% year-on-year increase in earnings before interest, taxes, depreciation and amortisation (Ebitda).
Ebitda increased from R199-million in the 2015 financial year to R243-million in the financial year ended June 30.
The company, which is celebrating its 100-year anniversary this year, further attributed the higher Ebitda to an improved product mix and plant efficiencies, as well as a 4% increase in lumber market share.
Earnings a share increased by 135%, while cash generated from operations reached R285-million, up by R102-million from the prior year.
Underlying net asset value was up 13% to 834c a share.
“Underlying tangible net asset value has grown sustainably and consistently over a five-year period, illustrating the growth of the biological asset and continued capital investment in cash-generating assets. During the same period, however, the share price of the company has reduced and is not an accurate reflection of the true value of the organisation,” CEO Pieter van Zyl said at a presentation of the company’s results on Wednesday.
York invested R283-million in Ebitda-generating capabilities during the year, including in a plywood expansion project, as well as mechanised harvesting in the Highveld forestry region.
The benefit of these investments, Van Zyl noted, would be realised for the next several years.
York has submitted a bid to develop a biomass power plant under the expedited bid window 4b of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) and is awaiting the preferred bidder announcement by government.
“The outcome of the REIPPPP bid will determine the timing of the next phase of the strategy. If the bid is successful and financial close can be achieved, York will build a 28 MW biomass power station with 25 MW sold into the grid under a 20-year power purchase agreement,” Van Zyl said.
He stated that not only would this contribute towards building an annuity income stream, but the synergy value for York’s forest will also improve the sustainability and yields from the plantation’s biological asset.
If the bid is unsuccessful, York will pursue the upgrade of its sawmills and further invest in remanufacturing capabilities.
Van Zyl pointed out that York's business is based on six strategic pillars, namely, lumber, plywood, forestry, wholesale, remanufacturing and energy.
“We will continue to invest in these value adding opportunities. With a strong balance sheet and good cash generation, York is well positioned to explore local and cross-border opportunities and potential international investments,” he said.