Woodbois Limited (LON:WBI) has hailed record output from its facilities in Gabon in the first quarter of 2021 as demand for its products increased amid a global economic rebound from the Coronavirus (COVID-19) pandemic.
In a trading update for the quarter ended March 31, the forestry and timber firm reported revenues of US$4.6mln, 44% higher than the previous quarter, while sawn timber production rose 83% to 3,700 cubic metres (m3) and veneer production increased 44% to 822m3.
READ: Woodbois establishes new reforestation and carbon credit division
The firm ended the period with cash of US$1.2mln and working capital of US$6.2mln as of April 6, alongside bank loans of US$8.3mln.
The company also said despite a short delay to the installation of its Primultini sawmill line due to supply chain disruption, completion is expected in May and will allow it to increase sawn timber production 30%.
Woodbois added that a stock theft investigation is proceeding with police in the Ivory Coast and it is continuing to see progress with the turnaround of its Mozambique business which has not been impacted by recent militant events in the north of the country.
Meanwhile, the company said it entered into the carbon credit market through reforestation projects at scale in Africa, which it expects to “grow exponentially over the coming years” and offer the firm a valuable add-on to its existing businesses.
Woodbois also provided an update on its final results for 2020, reporting an adjusted (EBITDA) loss of US$1.7mln, narrowed from a US$1.9mln loss in 2019, while revenues fell 22% to US$15.3mln, a decline largely attributed to the effects of the pandemic. The firm said it will announce its audited results for the year on April 29.
Positive cashflow expected in 2021
Looking ahead, the company said despite the ongoing spread of COVID-19 and the “challenging global economic environment”, it expects to turn cashflow positive and deliver record revenues in 2021.
The group also warned that global shipping markets continue to be impacted by a worldwide freight container shortage, partly due to a booming e-commerce sector, increased border restrictions and the recent blockage of the Suez Canal in Egypt.
Elsewhere, the firm said it has engaged with the Programme for the Endorsement of Forest Certification (PEFC), a global alliance of national forest certification systems, in order to achieve FSC certification. However, it said COVID-19 continues to impact the workstream with certification now expected to complete in 2022.
"A record quarter of output from our upgraded facilities in Gabon has coincided with an increase in demand for our product as economies around the world began to rebound from the global pandemic. The quality and drive of the new members of our team is being reflected in a material improvement in processes and output numbers. These results are being delivered while Gabon still has a strict curfew in place which continues to restrict the number of hours worked so we can expect further uplift ahead as and when restrictions are eased”, Woodbois executive chairman and chief executive Paul Dolan said in a statement.
“Global demand for our product remains strong, as does pricing which is allowing us to absorb the current spike in freight rates…Our entry into the carbon credit market is exciting and we see significant potential in this area going forward. According to United Nations Framework Convention on Climate Change, more than 1,600 corporates representing more than $11 trillion in annual sales have to date committed to net zero carbon emissions by 2050. Additionally, billions of corporate dollars have already been earmarked for reforestation projects. To meet this rapidly increasing demand for quality carbon credits there must be supply of transparent and verifiable credit generating projects. We believe that forests currently represent one of the safest, proven and economically viable methods for capturing carbon at scale and Woodbois is well placed to deliver such projects”, he added.
Shares in Woodbois were 2.6% lower at 5.7p in early deals on Wednesday.