Increase in productivity
The harvest volume in 2020 was 250 100 m3, an increase of 5.5 % over the previous year (237 100 m3). The sawmills in Bambidie processed 129 900 m3 of logs, an increase of 8.1 %. Sawn timber production amounted to 44 600 m3 (previous year: 42 300 m3). These positive figures show that we had only few outages due to the Covid pandemic. The safety measures implemented and the inspections carried out by public authorities helped to keep the impact on our operations low. We did, however, suffer from obstacles beyond our control. Firstly, the condition of the roads and the lack of rail capacity prevented us from delivering sawn timber on time. Secondly, a lack of containers, strikes by the public authorities, and the low frequency of container ships with limited capacity impeded handling at the port. This again led to an excessively high inventory of sawn timber at the end of the year. The pandemic and logistics problems also led to delays in the launch of the new hardwood sawmill. Machine parts could not be delivered on time, and travel restrictions prevented the entry of technicians and specialists for an extended period of time. The maintenance work on the existing sawmills could be carried out on schedule, given that we had procured spare parts in time before the lockdown.
In the past, our veneer plant (TGI) repeatedly suffered from the difficult market environment and also from technical problems affecting yield. For these reasons and also because major investments have to be made, we decided to enter into a partnership with the French Groupe Arbor. Groupe Arbor also has veneer production in Gabon and operates plywood board production in France. It is one of the leading suppliers of these products on the European market. Precious Woods is able to ensure the supply of certified logs in Okoumé, and Groupe Arbor complements this with optimal processing and distribution. For this purpose, the two companies in Gabon have merged, and Precious Woods retains a 49 % stake in the new company called «Compagnie des placages de la Lowé» (CPL). Notarisation took place at the end of the year but with retroactive effect from 1 October 2020. All sales of CPL are made through the central office of Precious Woods Holding Ltd.
Veneer prices came under strong pressure in 2020 – more than sawn timber prices – due to high inventories of our customers. This, combined with the decrease in yield by 3.3 percentage points in the first nine months of 2020, resulted in a major loss. The merger with our joint venture partner is already showing positive effects, and we are very optimistic for the future.
PW Gabon’s total investments in the amount of EUR 4.1 million were used for buildings (EUR 1.3 million), forestry machinery (EUR 0.7 million), homes for employees and their families in Bambidie (EUR 0.5 million), vehicles (EUR 0.6 million), and the sawmills (EUR 1.0 million). Construction of the new sawmill for Azobé sawn timber started in 2019. Operations began with a delay in spring 2020. At the beginning of 2021, we moved to two-shift operations, which will strengthen profitability.
There were some changes in our expatriate management in Bambidie. Overall, however, our employee situation has been very stable. The conditions made more difficult by the lockdown were mastered well, but demanded a lot from our management, especially given that some employees were not able to travel home for months. We would like to take this opportunity to express our warmest thanks to our local management and all our employees for their great dedication.
The VAT credit with the Gabonese government increased again, given that not much could be repaid. The amount is lower overall, because most of the credit relates to the veneer plant. Our investments could be financed with bank loans from local institutions. However, the delays in sales and the increased costs from interruptions in operations again led to a tense liquidity situation. Inventory increased again and tied up cash. We expect the situation to ease but it remains uncertain when this will happen. The various ministries are now working together more closely and trying to find solutions. However, implementation of the measures is facing delays, also due to the pandemic. The fight against corruption continues, which led to individual authorities becoming unable to act or being understaffed in the short term.