Slow economic growth and a lack of confidence in the construction sector resulted in lower sales volumes in most of JSE-listed York Timbers’ product categories for the financial year ended June 30.
The company’s financial performance was further impacted on by raw material supply challenges.
York on Tuesday said supply was repeatedly interrupted as a result of excessive price increases announced by the State-owned South African Forestry Company (Safcol).
The company is working to resolve the dispute with Safcol, but considers a 17% yearly price increase on logs to be unreasonable.
Forestry results were negatively impacted on by this impasse, with higher-than-anticipated logistics costs, as logs were transported over longer distances to keep plants fully supplied and operational.
Alternative raw material supplies are available to York and are being secured. The company is also considering expanding its forestry operations outside of South Africa.
York’s revenue increased by 3% year-on-year to R1.8-billion, while earnings a share and headline earnings a share were up 59% year-on-year at 116c.
Earnings before interest, taxes, depreciation and amortisation increased by 3% year-on-year to R246-million, while profit after tax increased by 54% year-on-year to R367-million, driven by 21% growth in the value of the company’s biological assets.
Meanwhile, the company’s plywood expansion project was commissioned as planned, but was scaled down to address one press with critical failure and another with metal fatigue.
This resulted in York making the two presses redundant and replacing them with a new higher capacity press that will be commissioned in February 2018.