Border Timbers Limited (BTL) has recorded profit in the fours to October 31 driven by a surge in demand for poles and lumber, the company’s provisional judicial manager Peter Bailey has said.
BY TATIRA ZWINOIRA
The company was, in January, placed under provisional judicial management to protect all stakeholders after it had failed to negotiate with lenders.
The demand for poles and lumber which is BTL’s main products has remained strong for both their local and foreign market.
Speaking on the sidelines of BTL’s annual general meeting yesterday in Harare, Bailey said the company has started to generate cash despite lenders pushing for immediate repayment.
“The immediate problem was that many of the lenders were pushing to have immediate repayment and the company was just not in a position to repay, it was very illiquid. At the same time it had started its turnaround and was beginning to generate cash and within a month or two of me joining was generating good profits. In fact, the last four months it has generated good profits,” Bailey said.
“So with my appointment I was able to stop any legal action causing a problem, giving some breathing space to negotiate new lending agreements. With the new agreements, which I hope will be sorted out very soon, the company will be resuscitated very much more quickly.”
To help bolster company profits, BTL is in negotiations with a local firm to secure additional capital that, if successfull, will see the company repaying the loan in eight to 10 years. BTL’s production volume was up 45% in the prior year, in the main driven log supply and as a result outsourced harvesting and secured pole orders in the region.
Turnover was up 7% over the prior period last year, largely as a result of increased transmission pole sales into the region, while sales volumes were up by 2% as it has been affected by the depreciation of the South African rand against the dollar.
BTL financial director Wellington Mutizwe said that earnings before tax was positive.
“Earnings before tax is positive compared to the loss for the same period last year. The company has posted profits on a monthly basis since July 2015. There has been a rigorous approach to managing costs along the production chain paying off,” Mutizwe said.
“The business has been on a positive trajectory, particularly the last three months of the last financial year, right through to the current financial year.”
As at June 30, BTL revenue from continuing and discontinued operations was $17,8 million, down from the previous year of $18,05 million.