York Timbers has posted a notable rise in headline earnings per share, reaching 30.11 cents for the fiscal year ending June 2024, bouncing back from a substantial headline loss of 77.43 cents in the previous year. However, dividends continue to evade shareholders as the company navigates through its cautious recovery phase.
Smalltalkdaily Research analyst Anthony Clark, however, said “the process of maturity of the (company’s) timber continues to have an impact” on the company.
“There has been a like-on-like improvement but investors and shareholders still have a 12–18-month wait for the turnaround strategy to start to pay. Top line results look fair but core headline earnings per share (HEPS) still going in the wrong direction with a loss of 10.74 cents per share,” said Clark.
York Timbers operates across the full forestry value chain in addition to sawmilling operations and a plywood plant. It markets its products across SA and regional retail and wholesale markets and also owns and runs avocado, macadamia and citrus farms.
The value of biological assets in the company increased by 11% to R2.8 billion while cash generated from operations decreased by R99.7 million to R28m over the full year period to end June.
With adjusted earnings before interest, tax, depreciation and amortisation declining by R19.7m to R90.6m after revenues rose 5% to R1.7bn, York Timbers did not declare a dividend for the period.
Nonetheless, net working capital increased by 59% to R204.8m as debt in the company increased by R69.7m, taking its net debt to R406m.
During the period, York Timbers refinanced its debts with the Land Bank and Absa Capital with a R350m facility from the Nederladnse Financierings-Maatschappij voor Ontwikkelingslanden NV. It also renewed working capital facilities with Absa after the end of the reporting period.
This was against the backdrop of York Timbers continuing to “experience tough market conditions coupled with operational challenges at its processing plants” while there were also “increases in raw material and operational” costs. These costs “could not be absorbed by price increases in sales” prices.
York Timbers has said that the purchase of the Wolkberg plantation has been terminated due to the plantation being destroyed by a fire.
However, the acquisition of the Schultz plantation for R41.3m will go ahead.
During the period under review, York Timbers’ liquidity was constrained by its strategy to increase the rotation of its plantations.
The company has spent R283m on external log purchases under the current year,
“The group has the flexibility to harvest its own plantations instead of procuring logs externally to improve liquidity,” it said.
Last year, the company presided over a 9% decline in revenues while its 2023 adjusted Ebitda earnings were lower by R161m. Cash generated from operations also halved in 2023 to R128m on the back of a 12% decline in the value of biological assets.