viewWoodbois Limited

Woodbois expects growth to accelerate in 2019


  • Forestry and timber trading company
  • Operates 1mln acres of forest in Gabon and Mozambique
  • New kilns and sawmill to improve profitability and margins this year

Quick facts: Woodbois Limited

Price: 6.6 GBX

Market: LSE
Market Cap: £30.72 m

What it does

Woodbois Limited (LON:WBI) is an Africa-focused forestry and timber trading company.

It is involved in the production, processing, manufacture and supply of sustainable African hardwood (i.e. beech and blackwood) and hardwood products.

The AIM company manages and operates around 1mln acres of natural forest concessions in Gabon and Mozambique, where it also has manufacturing facilities.

Its products are transported all around the world, and used for things such as boat building.

As well as harvesting and producing its own products, Woodbois also sources softwood (pine and redwood) and hardwood products and sells them across the globe.



Change of name reflects change in focus

Formerly known as Obtala, the company sold off its agriculture business in Tanzania earlier this year.

That was part of a move to double-down on the timber trading and production arm of the business, which bosses thought would help attract new investors and trade finance partners.

That turned out to be the case, with 1798 Volantis Fund, Lombard Odier Asset Management’s small cap team, subscribing for US$6.5mln (£5mln) worth of shares and committed to providing a US$5mln loan.

Lombard Odier is now the company’s largest single shareholder with a 25% stake.



How it’s doing

Woodbois notched up record quarterly revenues in the three months to the end of September.

Revenues of US$4.9mln Q3 represented a 44% increase from 2018's average quarterly run-rate and continued quarter-on-quarter growth.

The group’s trading division was responsible for US$$3.4mln of those revenues; the division’s revenues were up 70% from the average quarterly run rate seen in 2018.

Further growth from the division is expected as a result of further investment made in the third quarter.


Blue sky

Growth is expected to pick up further as the year progresses, with new kilns installed in Gabon in the third quarter, to be closely followed by a new line of sawmilling equipment that should become operational before year-end.

The new kilns will boost annual profits by US$700,000 as Woodbois won’t have to outsource this to third parties, while the new sawmill increases production and enhances recovery levels.

The installation of drying kilns at the group’s sawmill in Mouila in September was described as “a major milestone” and should lead to a margin improvement of around eight percentage points from sawn timber, with a further two-point margin increase from reduced logistics costs.

The recent investment from Lombard Odier, as well as US$10mln worth of trade loans secured since the beginning of the year, should also allow for bosses to add “significant scale” to the business in 2019.



What the boss is saying

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on 13/5/19

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