viewWoodbois Limited

Woodbois expects growth to accelerate as new kit comes on line


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

Quick facts: Woodbois Limited

Price: 5.65 GBX

Market: LSE
Market Cap: £26.3 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-listed 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 in 2019.

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 has notched up record revenues in the past five quarters, it confirmed in early 2020, leading to revenues of around US$20mln for 2019, a 48% increase on the prior year.

The fourth quarter of the year saw revenues of US$5.6mln, with the trading division responsible for US$3.8mln of those; the division’s revenues were up almost three quarters from the average quarterly run rate seen in 2018.

The re-tooling of its Gabon sawmill before the year-end deadline has produced an immediate “step-change” in recovery rates, with improved yields implying higher levels of output and therefore revenue for the same unit cost of input.

Blue sky

This is expected to help growth continue to pick up, with a further boost from new kilns installed in Gabon earlier in the year.

The new kilns will boost annual profits by US$700,000 as Woodbois won’t have to outsource this to third parties.

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 further scale to the business.

What the boss is saying

“While aiming to continue the delivery of significant levels of top-line growth during 2020, the group will also implement measures to strengthen its cash balance and improve margins, while further leveraging its fixed cost base to improve overall profitability," said chief executive Paul Dolan in January.

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