Woodbois Limited (LON:WBI) said it is on track to become cash flow positive and profitable this year.
The forestry, timber trading, reforestation and voluntary carbon credit company said it expects a step-change in the pace of revenue growth as well as further margin improvement once the freight industry normalises, which experts have forecast for later this year or early 2022.
READ: Woodbois again ranked highly for ESG among timber producers
The group’s top line in the first half of the year was hit by constraints in the freight shipping industry, including equipment shortages, a drop off in port productivity and a reduction in carrier capacity, that created a temporary knock-on effect on booked revenue.
However, gross profit margins advanced to 20% from 8% in the full-year 2020, due to the quality of product delivered by the firm’s upgraded manufacturing facilities, strong global demand for sawn timber and corresponding increase in prices, and the application of proprietary trading tools and technology.
The Africa-focused company is undertaking final due diligence to complete the acquisition of a further 56,000 hectares of forest concessions in Gabon.
Its concessions in Mozambique will continue to be operated by third party operator Future Earth for the remainder of 2021 and were not impacted by the recent unrest seen in the north of the country.
“The second quarter was a pivotal period for the business as we witnessed a hard-earned positive rebase of operating margins and executed on the next stage of our expansion plans through the acquisition of two additional veneer lines in Gabon as well as successfully completing an upsized fundraising,” said executive chair and chief executive Paul Dolan in a release.
“As the global economy transitions to net zero, the emergence of carbon as a major new asset class was the catalyst for us launching our carbon sequestration and trading division. Carbon prices have increased more than 60% in 2021, ahead of expected EU reforms designed to accelerate emission reductions, and we expect both companies and assets to become increasingly viewed through the lens of climate transition.”
Revenues in the six months to 30 June came in at US$8.2mln, compared to US$6.7mln in the same period in 2020. As of 6 July, the cash balance was US$6.3mln with bank loans of US$9.5mln.
Shares rose 2% to 4.68p on Wednesday morning.