First half-year 2018: Positive net result despite difficult conditions
In the first half of 2018, sales amounted to EUR 22.8 million and earnings before interest and taxes (EBIT) amounted to EUR 1.5 million or 6.8 %. This represents a slight increase in sales of 1.7 % and an EBIT reduction of EUR 0.3 million compared with the same period of the previous year. Delays in deliveries reduced sales by about EUR 3 million and also had a negative impact on EBIT. This affected the companies in both Gabon and Brazil. Production volumes increased slightly. The net result reached EUR 0.2 million (previous year period: EUR 0.3 million). The generated cash flow enabled further investments in productivity, but no debt reduction. Working capital increased by EUR 0.4 million over the end of the year. This was mainly due to inventory increases. The outlook and expectations for 2018 as a whole remain positive.
The Precious Woods Group generated net sales of EUR 22.8 million in the first half of 2018. This was 1.7 % above the previous year’s net sales of EUR 22.5 million. The exchange rate effect was –0.8 %. The saw mills in Gabon generated a 12.7 % increase in sales, while sales at the veneer plant fell by 12.0 % compared with the same period of the previous year. On a consolidated basis, Precious Woods Gabon achieved sales of EUR 15.7 million, 3.3 % higher than in the same period of the previous year (EUR 15.2 million). Sales in Brazil fell by 11.2 % to EUR 4.9 million (previous year: 5.5 million). Sales from the trade of logs and sawn timber from Europe rose by 21.4 % to EUR 2.4 million (previous year: EUR 2.0 million).
There were delivery delays in both Brazil and Gabon in the first half-year. Shipments from Brazil were not resumed until April 2018, after large-scale inspections against the illegal timber trade started in mid-December 2017. Of the 64 containers blocked at the time, 20 are still in the port of Manaus waiting to be released, even though no deficiencies were found. New deliveries were brought to the port and shipped again starting at the end of March. Delays occurred in Gabon due to the opening of a second port. Goods could not be cleared, and numerous ships had to leave again without being loaded. This led to a shortage of containers as well as shipping capacity and consequently to a high undelivered inventory of Precious Woods. We expect the situation in both countries to return to normal in the third quarter of 2018. The delay in sales amounts to more than EUR 3.0 million. This margin is missing in the income statement, and the additional expenses are also a burden on the result.
The gross profit was EUR 13.6 million, 3.6 % below the previous year period (EUR 14.1 million). The gross profit margin was 59.7 %, compared with 63.0 % in the previous year. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to EUR 3.9 million (previous year: EUR 4.1 million), corresponding to a margin of 17.0 %. Earnings before interest and taxes (EBIT) reached EUR 1.5 million (previous year: EUR 1.8 million), with a margin of 6.8 %. The negative changes are due to the delivery delays and the associated unrealized margins.
The financial result was EUR –1.4 million (previous year: EUR –1.3 million). The pure interest charge was unchanged at EUR 1.1 million. The net profit amounted to EUR 0.2 million (previous year: EUR 0.3 million). Exchange rate effects on the net result amounted to EUR –0.1 million (previous year: EUR 0.1 million).
The equity ratio was 25.9 % (end of previous year: 28.1 %). The change is due to exchange rate effects, especially for loans in CHF.
Working capital was EUR 16.0 million, about EUR 0.4 million higher than at the end of the previous year and EUR 2.5 million higher than on 30 June 2017. While the log inventory was reduced, the sawn timber and veneer inventory increased to the same extent due to the delivery difficulties described above. At EUR 6.6 million, trade receivables were EUR 1.6 million higher than at the end of the year. Trade payables fell by EUR 0.2 million. Overall, net debt increased by EUR 0.5 million to currently EUR 31.8 million.
Operating cash flow was EUR 1.0 million (previous year: EUR 1.9 million). This includes the change in net working capital of EUR –2.5 million (previous year: EUR –1.5 million). Investments amounted to EUR 0.6 million (previous year: EUR 0.8 million).
Brief remarks on the individual companies: