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NewsDay

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Depressed prices hit Border Timbers

Business
BORDER Timbers has widened its loss to $3,2 million for the half year ended December 31 2014 from $2,9 million in 2013 due to depressed market prices and operating below plan.

BORDER Timbers has widened its loss to $3,2 million for the half year ended December 31 2014 from $2,9 million in 2013 due to depressed market prices and operating below plan. BY TARISAI MANDIZHA

In the period under review, revenue declined by 2% to $9,9 million from $10,6 million.

In a statement accompanying the group’s abridged unaudited results for the half year, Border Timbers provisional judicial manager Peter Bailey said new marketing strategies coupled with improved grade outturn abated downward effects of lower prices on the international market.

Bailey said the market refocus resulted from liquidity constraints and reduced incomes that have induced lower product uptake on the local market.

“The return to core business after the exit from the loss-making value addition business has left the company with a leaner and better structure.

“The company is now primarily focusing on market development and costs containment to put the business on a sustainable growth path. Demand for the company’s product in the region remains strong,” Bailey said.

He said despite offering the best returns as compared to external markets, local product uptake continues to be under pressure due to declining disposable incomes and lack of fiscal space for major construction projects.

During the period under review, total sales dropped by 15% to $10,3 million from $12,1 million in 2014. Administration costs increased by 10% to $1,7 million, resulting from care and maintenance costs of moth-balled veneer plant. Other operating expenses jumped by 619% to $1 million.

Commenting on operations for Silviculture, Bailey said the total area planted during the period was 441 hectares as compared to 199 hectares in 2014, 242 hectares below plan, attributed to the late onset of the rainy season.

He said other activities such as pruning, weeding and thinning ran below plan and remained constrained due to largely tight liquidity.

He added that saw milling, outsourcing of harvesting and log transport has impacted positively by stabilising fibre supply to mills as this has improved through put level.

On poles, Bailey said the demand for poles in the region remains relatively firm. The company’s order book was full to the remainder of the financial year.

“The poles manufacturing business continues to improve through its mainstay export market into Zambia and Mozambique. Tanzania and other dollarised markets are currently under assessment for export, mostly for the large diameter poles. The local market has been subdued during the period and is projected to remain the same to year-end as a result of tight liquidity conditions and limited access to capital,” Bailey said.