Obsolete equipment strains Border Timbers performance

OBSOLETE equipment and constant breakdowns have become a major drawback to the growth and performance of listed timber producer, Border Timbers, which recorded low output and weak sales for the third quarter ended March 31, 2023.

In its trading update for the period under review company chairman, Mr Elias Hwenga, said the business was seized with the recapitalisation of its operations in order to eliminate losses due to breakdowns.

“Harvesting and sawmilling activities were below target, due to frequent breakdowns of our aged sawmilling equipment,” he said.

“Recapitalisation of the sawmills is on course with the installation of new sawmills at Charter and Sheba expected in June 2023 and December 2023 respectively,” said Mr Hwenga.

“We are excited that our Sheba, Imbeza, Sawerombi, and Charter Estates are now FSC (Forest Steward Council) certified. This is expected to bring enhanced adherence to forestry operational practices, a premium on product prices, as well as opening new markets, particularly the European market where FSC certification is a prerequisite.”

Border Timbers

Mr Hwenga also said lumber sales volumes were 12 percent down compared to the comparative period in the prior year. He said the reduction in sales volume was mainly because of lower production from the sawmills, which is expected to improve after the commissioning of the new sawmilling equipment.

“The demand for lumber remains strong in the local market and the company continues to aggressively expand both the local and export market,” he said.

“Pole sales volume was 29 percent lower than the comparative period in the prior year, this is mainly because of timing differences that are usually experienced in the acquisition of tenders, which is asymmetrical.

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“Improved performance is anticipated in the poles business due to expected demand for the product in Botswana, Zambia, and Malawi markets.”

In its financials, Border Timbers said its revenue for the nine months was 125 percent higher at $7,7 billion compared to the same period the prior year.

“This was mainly because of the consistent quality of our Kiln Dried Timber, which resulted in better average selling prices. A high profit before tax was driven mainly by fair value gain due to biological assets transformation,” said Mr Hwenga. —-ebusinessweekly