Quarterly Update

RNS Number : 4401B

Woodbois Limited

08 October 2020

 

8 October 2020

Woodbois Limited

("Woodbois", the "Group" or the "Company")

Q3 2020 Update

Woodbois Limited (AIM: WBI), the African focused forestry and timber trading company, is pleased to announce its Q3 trading update for the period 1 July 2020 to 30 September 2020.

· Balance sheet restructuring completed in August 2020

· Q3 Revenue of US$3.2m (2019: US$4.9m)

· YTD Revenue of US$11.8m (2019 ytd US$14.2)

· Q3 gross profit margin consistent with H1

· Purchase of Primultini sawmill line for Gabon project facilitates increase to full capacity in 2021

· Ranked 3^rd up from 7^th in 2020 SPOTT global ESG transparency assessment

· On track to meet full year expectations

Balance sheet transformed in Q3

Trading in the quarter was in line with expectations, with COVID-19 restrictions becoming more tempered but with limited capital to deploy prior to the August balance sheet restructuring. During the quarter, management successfully transformed the balance sheet, significantly reducing net debt from US$49.9m to just US$1.1m. This resulted in a 50% reduction in interest charges for Q3 over the previous quarter, and the positive impact from the restructuring will be even greater in Q4 2020 with interest charges expected to be approximately 90% lower than in Q2.

Having transformed the Group's financial condition, the goal of driving growth and positive free cash-flow from our sustainable forestry operations and trading division has now moved to the top of the management team's agenda.

Wider benefits of the restructuring are also coming together, including the certainty it has provided for the trading division with regard to the ability to now commit capital in order to firm up offtake agreements with suppliers, especially with regard to recurring programme transactions.

Rapid recovery in demand for construction materials

Notwithstanding the disruption of COVID-19, the Group has managed to maintain gross margins of just above 10%, due in part to a strong emphasis on cost management.

Due to the pausing of orders, trading and production cycles were disrupted from April 2020, resulting in a corresponding dip in revenues for Q2 and Q3. We are now seeing a strong recovery in demand particularly from Asia, which combined with the additional production capacity that continues to come on-line leads us to anticipate higher levels of activity and revenue during Q4.

Significant capacity increase in Gabon with purchase and installation of new sawmill line

A fully reconditioned Primultini line capable of converting 100m3 of logs per day into sawn timber has been purchased, substantially completing the equipping of our sawmill in Gabon. This line will be shipped to Gabon during Q4 and is expected to be installed and operational by the end of Q1 2021.

Sustainable forestry management recognition

In August 2020 Woodbois was ranked third in the SPOTT ESG transparency assessment for worldwide timber and pulp industries, up from seventh in 2019. SPOTT assesses multiple worldwide timber and pulp producers and traders on the public disclosure of their policies, operations and commitments to ESG best practice.  The increase in ranking to third place globally, recognises the importance the Group places on sustainable forestry management and underpins how the Group strives to constantly improve the standard of its ESG policies, providing transparency and good governance alongside its well documented sustainability focussed operating model.

Operating under COVID-19 restrictions

Certain measures to contain the spread of COVID-19 remain in place in Gabon, including a curfew during the hours of darkness. These measures restrict the movement of our staff meaning that we continue to run a single shift at both the sawmill and veneer factory, rather than two and three eight-hour shifts respectively. The number of daily confirmed cases in Gabon has recently been in single figures having peaked at 570 in mid June and 396 in late July. We look forward to increasing production levels once these measures are adjusted and as soon as it is safe to do so.

Executive Chairman and CEO Paul Dolan commented : "Praise is due to our workforce for their commitment throughout such a testing and uncertain period. Their adaptability, unstinting support and commitment to helping us navigate through this period has been the cornerstone of the resilience of the business.

"The financial transformation we effected during this quarter means that the Group is well positioned to deliver significant, profitable growth as the global economy recovers in the months and years ahead.

"With our facilities now operating again and given the pronounced uptick in demand that we are starting to experience, we anticipate both revenue growth and margin expansion as we exit 2020. This gives us confidence that we can achieve our current targets for the full year.

"We are seeing clear evidence of continued demand from around the world for our products. This, alongside the broader context that the global population is set to grow by almost 1 billion people during the course of this decade, underpins our assumption that that demand for construction materials, particularly in the developing world, will inevitably increase."

Enquiries:

Woodbois Limited Paul Dolan - Chairman and CEO	+ 44 (0)20 7099 1940
Canaccord Genuity, Nominated Advisor Henry Fitzgerald-O'Connor James Asensio Thomas Diehl	+ 44 (0)20 7523 8000
Alma PR, Financial PR Rebecca Sanders-Hewett Justine James Robyn Fisher Kieran Breheny	[phone] [e-mail]

Notes to Editors

Woodbois Limited (AIM:WBI) is an African focused forestry and timber trading company, which produces, processes, manufactures and distributes sustainable African hardwoods and hardwood products to customers around the world.

Woodbois forestry division has production facilities in Gabon and Mozambique, managing a total of c400,000 hectares of natural forest concessions. The trading division comprises a highly experienced team of timber specialists, who source and supply sustainable timber to a global customer base. Its proprietary technology developed in house, captures, stores and presents data, providing a matching engine to build scale and optimise trading opportunities.

Sustainability is at the heart of the business, with a clear focus on maintaining the transparency and sustainability of its timber operations. This has been recognized by The Zoological Society of London, which ranked Woodbois 3^rd in its Sustainability Policy Transparency Toolkit ('SPOTT'') ESG policy transparency assessments for the worldwide timber and pulp industries for 2020.

Headquartered in London, with forestry operations in Gabon and Mozambique, Woodbois also has offices in Denmark, Ivory Coast, Mauritius and South Africa.

 

END

 

 

UPDKKOBDKBDBDKK