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Precious Woods Trading – reduced activities and decline in sales by about 16 %
Trading in logs and sawn timber from Europe complements the current product range of Precious Woods and expands our knowledge in the sales and procurement market. It supplements our core business, namely the processing and trading of tropical sawn timber and veneer from Brazil and Gabon.
Net sales from the trading business in the 2019 reporting year amounted to EUR 3.9 million, corresponding to a decrease of 15.6 % from the previous year (2018: EUR 4.7 million).
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The main sales market for our traded products is China, whose demand declined in the fiscal year. Demand was lower than supply, which put so much pressure on prices that this business was no longer profitable for us. It is difficult to assess future development. Despite adverse effects due to the COVID-19 epidemic, we expect the situation to recover somewhat in 2020. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to EUR 0.1 million. The EBITDA margin was 2.5 % (previous year: 9.3 %).
For Precious Woods, trading activities in Europe are strategically important, because this activity secures expertise in the sales and procurement market and creates synergies with our other business areas in production. The challenge will be to apply the insights specifically to our operations in Africa and Brazil and to use them for the benefit of our customers. In future, the range of products will be supplemented by the sale of tropical timber from other FSC-certified operations in Central and South America. Some of these projects are carried out by local communities, in which cooperation with the environmental organization Rainforest Alliance is sought or already in the implementation phase.
Precious Woods Trading in brief
After the decision to close PW Europe, the administration of that company was taken over by PW Holding in Zug from 2014, and goods were delivered directly from the production plants in Brazil and Gabon.
In 2014, activities were expanded to include the trading of certified European logs and sawn timber. This now complements our diverse range of products.