TIDMWBI
RNS Number : 0186D
Woodbois Limited
17 October 2022
17 October 2022
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Q3 2022 Update and Board change
Woodbois Limited (AIM: WBI), the African focused forestry,
timber trading, reforestation and voluntary carbon credit company,
is pleased to announce its update for the third quarter to 30(th)
September 2022:
Substantial production increases maintained, gross margin
improved
-- Record quarterly revenue, up 29% to $5.8m in Q3 2022 vs Q3 2021 $4.5m.
-- Record nine months revenues of $17.1m in 2022 vs $12.7m for the same period in 2021, up 35%.
-- Group gross profit margin for first 9 months of 2022 further
improved to 24% from 20% in FY 2021 and 23% in H1 2022.
-- Cash balance of $1.4m as at 30 September 2022
-- Period end working capital(1) of $9.3m of which inventory was
$6.1m and excluding bank and other loans of $12.3m
-- Q3 Sawmill production 6,032m3, a 78% increase on the 2021 quarterly average
-- Q3 Veneer production 1,418m3, a 45% increase on the 2021 quarterly average
Total output from our factories increased again during Q3, with
new records for production set for sawn timber and consistent
output of veneer. The total quantity of goods shipped was
marginally above the strong previous quarter, making it a record
quarter for shipping of own production.
The veneer team will work on test orders from the bigger second
line, as its output is progressively ramped up during Q4.
Commissioning issues such as late receipt of parts delayed its
start-up but the benefits of its higher value-added products will
be increasingly seen as higher volumes of veneer are shipped in
2023.
Financial
Additional economies of scale continue to be realised as factory
output increases, and these economies combined with a careful focus
on cost control delivered further improvements in Group gross
profit margins to 24% for the first nine months of 2022 vs 23% in
H1 and 20% for FY 2020. Working capital marginally reduced to $9.3m
at 30 September 2022 owing to expected capex. Total borrowings
decreased marginally during the quarter from $12.4m to $12.3m
reflecting machinery lease repayments made during the period.
The Group has reduced senior management head-count and costs,
which will benefit Q4. The Group is also focused on higher margin
own-product sales and improving working capital and is therefore
planning a reduction in third party sales in Q4. The raw material
from our forestry concessions provides some protection from
inflation, whilst our revenue mix is largely USD based and many
costs are incurred in local currencies. Accordingly we expect some
further improvement in gross margin in Q4.
Operational
The investment into plant and machinery and the quality of the
personnel recruited and integrated over the last two years is
yielding both higher volumes and margins as quality continues to
improve. Maximising margin through identifying the optimal markets
to sell into has been a key focus for our revamped sales team who
have been highly visible and were successful in generating orders
from new customers at recent trade shows in Algeria and the
USA.
The Group will continue to broaden its distribution channels in
existing and selective new attractive markets. In the near-term
Woodbois will concentrate on making sales into geographies
experiencing high levels of economic growth, such as the Middle
East and North Africa, with strong representation at the final
trade show of the year in Egypt in December.
Availability of containers for shipping continued to improve
during Q3 and the sharply elevated prices for sea transport
experienced since 2020 continued their gradual downwards trend
towards pre-pandemic levels. The Group expects a higher
interest-rate, higher-inflation, lower-growth economic environment
worldwide to lead to some softening of demand. However, our
substantial recent investments in production facilities will
increasingly enable Woodbois to sell a greater proportion of higher
value-added products to a broader range of markets.
Completing FSC certification of our forestry concessions and
factories remains a top priority for the Group. Significant
progress has been made during 2022 and we are now 62% complete.
Certification will increase markets, margins and profitability.
It is an aim of the Group to become carbon neutral in the
medium-term and thence to becoming carbon negative through the
development of carbon projects.
Carbon
Planning for our initial large-scale afforestation project in
Gabon continues to be the focus for the carbon division and
discussions with the relevant government Ministers have continued
to progress. Because the timing of allocation of land for this
project is not within our control and to validate our
proof-of-concept we will commence a limited initial pilot project
on an area of low carbon stock land within our existing
concessions. Upon receiving any grant of land from the government
we will immediately look to scale the pilot scheme, preferably with
the financial support of one or more external funding partners.
COP27 will take place in Egypt shortly. As chair of the African
Group of Negotiators on climate change and noted as the most carbon
negative country on earth, Gabon is expected to continue to play a
prominent and leading role. Members of Woodbois' senior management
will attend and will be available to meet stakeholders throughout
the event.
Board
After approaching four years as a Non-Independent Non-Executive
Director and owing to his growing other work commitments at the
Company's second largest shareholder, Lombard Odier, Henry Turcan
is today standing down from the Board. His energy and guidance have
helped to transform the financial health of the Company, its
performance and its governance. The Board express their grateful
thanks to him on behalf of all stakeholders. The Company will
appoint a further Independent Non-Executive in due course.
Outlook
The investments made over recent periods are projected to enable
Woodbois to maintain its organic growth path with additional
higher-value-added capacity coming online, de-bottle-necking
benefits and utilisation of all of its concessions now the access
roads are completed. Incremental margin growth through the learning
and adoption of smarter working practices in all areas of
production and distribution is also an achievable target.
Recently, given the rising likelihood of some pricing pressure
however, its was felt prudent to reduce exposure to third party
trading for Q4 2022 and focus on own-products. The Group will
utilise its proprietary in-house technology to carefully monitor
risk, market pricing and demand to support further revenue and
margin expansion in Q4 and in 2023. Benefits are also expected from
our recently revamped and highly motivated trading and support
team, using our custom-built analytics.
CEO Paul Dolan commented : 'The business maintained its strong
momentum throughout Q3, delivering record quarterly revenues,
production and margins. Mindful of current worldwide uncertainties
we will continue to be resilient and adaptable. With further
high-value production increases underway we have a busy run-into
year-end. Almost regardless of market conditions we look forward
with confidence to further growth in 2023 and beyond.'
(1) Working Capital is a non-IFRS measure and consists of Cash,
plus Inventory, plus Receivables, less Payables.
Enquiries:
Woodbois Limited
Paul Dolan - CEO
Carnel Geddes- CFO + 44 (0)20 7099 1940
Canaccord Genuity, Nominated
Advisor
Henry Fitzgerald-O'Connor
Gordon Hamilton +44 (0)20 7523 8000
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END
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