Woodbois Limited (LON:WBI) has said it is “on track” to meet its expectations for the full year after completing a restructuring of its balance sheet in the third quarter.
In an update covering the period from July 1 to September 30, 2020, the Africa-focused forestry and timber firm said it has “significantly” reduced its debt to US$1.1mln from US$49.9mln, which in turn reduced interest charges in the quarter by 50% while the positive impact of the restructuring is expected to be even greater in the final quarter of its current year, with interest charges expected to be around 90% lower than in the second quarter.
READ: Woodbois sees cause for optimism due to uptick in summertime demand
Following the restructuring, Woodbois said its goal of “driving growth and positive free cash-flow” from its forestry operations and trading division was now at the top of its agenda, while the changes had provided certainty for its trading arm concerning its ability to “commit capital in order to firm up offtake agreements with suppliers”.
Meanwhile, the firm said its capacity in Gabon is expected to increase significantly following the purchase and installation of a new sawmill line, which will be shipped during the fourth quarter and is expected to be installed and operational by the end of the first quarter of 2021.
Woodbois also highlighted that it has managed to maintain gross margins of just over 10%, and while trading cycle disruption from the pandemic had caused revenue drops in the second and third quarters of the current year, it is now seeing a “strong recovery in demand particularly from Asia” which is predicted to drive “higher levels of activity and revenue” in the fourth quarter.
In its figures for the third quarter, the company reported revenues of US$3.2mln compared to US$4.9mln a year ago, while year-to-date revenue was US$11.8mln, down from US$14.2mln in 2019.
"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”, Woodbois executive chairman and chief executive Paul Dolan said in a statement.
"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 1bn people during the course of this decade, underpins our assumption that that demand for construction materials, particularly in the developing world, will inevitably increase", he added.
The company’s shares jumped 10.8% to 2.7p in early deals on Thursday.