• The Company exited judicial management in March 
  •  Revenue grew by 5%
  •  However, sales were down by 7%

Harare - Zimbabwe Stock Exchange (ZSE) - listed timber grower, Border Timbers says it is set to venture into European markets after the Company managed to secure the Forest Steward Council (FSC) Certification for Imbeza Estate.

This initiative ensures the best forestry management practices under FSC, which gives the company access to European markets that demand FSC-certified products.

The Company which exited Judicial Management in March this year said plans to secure the certification of other estates are in the pipeline while it further expects to replace old sawmilling equipment with the latest technology to increase production efficiency.

“The Company’s major risk remains the loss of forestry to fire and is continuously reviewing and strengthening its fire patrol teams as well as upgrading the firefighting equipment, ” the Company said in a statement accompanying the trading update for the nine months ended 31 March 2022. 

“The focus going forward is on intensifying our replanting activities, capitalizing on the rains, and advancing the winter planting plan.”

Despite a volatile economic environment which is infested by rocketing inflation, erratic power supplies, incessant dry spells and a decaying currency,  the Company expects its business model to continue being resilient and productive.

However, the Company encountered power supply challenges that affected productivity and ultimately, profitability.

Due to ageing power plants at Hwange Power Station and recurrent technical faults experienced at Kariba Power Station, effective power supply has been unfounded. Power utility, ZESA resorted to power rationing in a bid to balance domestic use and industrial use. This, however, delayed and curtailed industrial capacity. 

Of much concern is that erratic power supplies from ZESA come at a time the nation expects to achieve electricity self-sufficiency in barely seven months to come. 

The Company also suffered huge setbacks from unreliable rainfall patterns. The mid-season dry spells that lasted until the end of January heavily affected timber production. The later rains that came in early February and lasted until April also affected harvesting operations. 

As a result, lumber sales volume was 7% down compared to the comparative period in the prior year.

“The reduction in sales volume was mainly driven by low production volume as a result of power outages as well as the extended rainy season that affected harvesting operations, “the Company said.

“However, the demand for Lumber remains high both in domestic and foreign markets."

During the period under review, the Company incurred a 1012% decline in profit to a loss of ZW$ 1.2 billion from a profit before tax of ZW$ 166 million in 2021 during the same period. 

“The Inflation adjusted loss is mainly as a result of the differential accounting treatment of Biological Asset gain by International Accounting Standards 29-Financial Reporting for Hyperinflationary Economies which uses the Balance Sheet approach to account for biological gain as compared to Historical Accounting.”

“The differential accounting results in a biological loss of ZW$2.2bn under IAS 29 as compared to ZW$0.3bn biological gain under Historical Accounting,” added the Company. 

Since the beginning of the year, the Zimbabwe dollar has depreciated by 72% against the US dollar. The Treasury and Reserve Bank of Zimbabwe have been passing controversial economic policies that have struggled to make any notable achievement. 

However, despite a loss, inflation-adjusted revenue for the nine months grew by 5% compared to the same period the previous year. This positive performance was driven by the consistent quality of Kiln Dried Timber which resulted in better average selling prices and improved customer demand.

Also, treated poles sales volume was 17% higher than the same period in the previous year.

“This was as a result of marketing initiatives which has seen an increase in the market share within the region.”

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