Forestry and sawmill company York Timbers has flagged a drop in profit because of price increases in logs, higher transport costs and greater spending on diesel to minimise the impact of power cuts.
The company, valued at R1.02bn on the JSE, said in a trading statement and update for its 2022 half-year to end-December that these costs will not be recovered in its selling prices to consumers.
As a result, it expects its headline earnings per share, a common profit measure in SA that excludes certain items, to fall 27.5%-32.4% year on year to 11.56c-12.41c.
“York’s strategy to increase the clear-fell age of its plantations resulted in reduced harvesting from its own plantations. This required an increase in external log purchases where prices have increased significantly despite a reduction in lumber selling prices,” it said on Monday.
In January, York Timbers raised R250m in a fully subscribed rights offer approved by the firm’s board in early December.
The Mpumalanga-based group previously said it plans to use the fresh capital to buy more timber externally to preserve its current volumes and for much-needed upgrades to its manufacturing plants.
The company has been struggling over the past few years and had a tough operational year in 2022 in which higher-than-average rainfall hampered production and industrial action caused weeks of disruptions.
Core earnings will fall by about two-thirds and cash generated from operations by 30%-35% in the next results, expected to be published on March 30, the company said.
The company’s share price closed up 0.47% at R2.15 on Monday.
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