Forestry and sawmill company York Timbers saw profit fall close to four-fifths in 2022, a year marred by floods, strikes and leadership changes.
The R838m company reported on Wednesday that its profit for the year shrunk by 78.75% to R29.13m in what it called a “challenging” period.
“This was disappointing, particularly after the good momentum that was built in the prior year when York recorded its highest-ever ebitda (earnings before interest, tax, depreciation, amortisation and fair value adjustment on biological assets),” it said, after core earnings fell by R104m in 2022.
Founded in 1916, SA’s largest solid-wood processor produces lumber and plywood, while also having interests in fruit and nut production and packaging.
The higher rainfall from October 2021 to February 2022, which was 60% higher than the long-term average, meant the company struggled to access and transport logs.
When the rain cleared, members of the National Union of Metalworkers of SA (Numsa) embarked on an unprotected strike in April in Mpumalanga, which affected revenue and production before it was halted by a labour court judgment.
“After the strike, focus was placed on recruiting and appointing candidates from the local communities. This is to ensure the communities in which York operates are supported, and employees reside in or nearby York’s operations,” the company said.
Former CFO Gerald Stoltz was appointed as the new permanent CEO in July. He stepped into the role on an interim basis after former CEO Pieter van Zyl died in 2021.
Revenue fell by 4.7% to R1.84bn. York Timbers generates the bulk of its revenue from the sale of goods (98.94%), with the rest coming from rendering services and rental income. In terms of goods sold, most revenue comes from lumber sales (55.57%), followed by plywood (36.78%) and logs (4.58%).
York Timbers operates largely in SA and Southern African Development Community (Sadc) countries. More than four-fifths of sales happen in SA, followed by 12.26% in Sadc and the rest comes from elsewhere.
Looking ahead, the company is concerned about the impact that high inflation will have on the business, consumers and worldwide. It aims to combat this by improving its operational efficiencies, diversifying its product range, and focusing on developing export markets for its lumber and plywood to diversify its earnings base away from SA.
The company is looking at the clear-felling age of trees, which it believes is currently not optimal and not delivering appropriate shareholder returns, and hopes to have more room to manoeuvre after cutting its debt by R133m.
“While some patience will be required from shareholders, we believe that the increase in harvesting age will significantly improve shareholder returns in future years,” it said.
The agricultural side of the business hopes to benefit from a recovery in fruit and nut prices, which fell sharply after the war in Ukraine started and because of ongoing supply-chain issues, by planting an extra 60 hectares of soft citrus.
“The citrus varieties planted can accommodate the additional cold treatment required by the recently promulgated EU regulations, albeit at a higher cost,” it said.
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