Group results
Negative result despite higher sales
In the first half of 2023, Group sales amounted to EUR 32.9 million, and earnings before interest and taxes (EBIT) amounted to EUR -0.2 million or -0.6 %. Sales growth was 5.0 % compared to the same period of the previous year, and EBIT fell by EUR 3.0 million. This disappointing result reflects the difficult economic environment with substantial cost increases. Working capital increased again by EUR 0.6 million, reaching a new high of EUR 24.8 million. At the beginning of the year, operations in Gabon had to be shut down for about five weeks because diesel supplies could no longer be replenished due to a landslide. Another shutdown occurred in June, lasting several days. Maintenance work was performed earlier than scheduled, compensating for part of the shortfall in production. The sawmills in both Gabon and Brazil produced 21 % less sawn timber in the first six months. In December 2022, it was not possible to transport the entire harvested volume in Brazil, leading to a shortage of logs in the first half of 2023. Moreover, not all goods ready for shipment could be shipped, because transport routes once again did not function properly. Consequently, the Group’s net result in the first half-year was EUR -3.1 million (same period of the previous year: EUR -0.3 million). The generated cash flow was below expectations due to the high level of capital tied up in inventory. Debt increased by EUR 1.6 million from the end of the previous year, mainly due to the CHF/EUR exchange rate. The outlook and expectations for 2023 as a whole are being downgraded, given that no positive impulses can be expected from the market environment in the coming months.
| in EUR million | 30.06.23 | 30.06.22 | Index | Change | ||||
|---|---|---|---|---|---|---|---|---|
| Net Sales Precious Woods Group | 32.9 | 31.3 | 105.0% | +1.6 | ||||
| Net Sales Precious Woods Gabon | 19.3 | 18.5 | 104.7% | +0.9 | ||||
| Sawmills | 12.6 | 13.6 | 93.0% | –1.0 | ||||
| Net Sales Precious Woods Amazon | 8.4 | 8.8 | 95.7% | –0.4 | ||||
| Sawmills | 8.0 | 8.5 | 94.6% | –0.5 | ||||
| Net Sales Energy Biomass power plant | 1.5 | 1.7 | 91.2% | –0.1 | ||||
| Net Sales Precious Woods Trading | 4.5 | 4.0 | 113.3% | +0.5 | ||||
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The exchange rate effect on sales was 0.13 % compared to the same period last year.
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Net sales group
32.9
EUR million
Demand on the timber markets has deteriorated drastically and wood prices have come under pressure. The order backlog at our sawmills has decreased significantly, and there are no signs of a recovery for now. Fortunately, shipping costs have fallen sharply, but we are not yet feeling this relief due to global inflation and corresponding restraint in the construction sector. The average prices of the order backlog are currently still at the levels of the previous year, but as price pressure increases, new orders are below the prices of the previous year. In Brazil, we reduced production at the sawmill by about 20 % due to the unavailability of logs. The ongoing weakening of the EUR and the USD against the Brazilian real, resulted in higher costs on a consolidated basis and lower income in the local currency. In Gabon, the inventory of both logs and sawn timber was high because rail transport to the veneer plants and the port were severely limited. Switching to road transport was usually not possible either. This resulted in liquidity bottlenecks and increased inventory costs.
Unexpectedly, energy production was only slightly below the same period of the previous year. Supply to the city of Itacoatiara continued without hardly any reductions through mid-June.
The two veneer plants (CPL in Gabon – our 49 % stake) produced about 12 % less because of the interruption in the supply of logs. The increase in sales of veneer processed through Precious Woods Holding Ltd. amounted to 1.8 % due to the reduction in inventory. Given that value added is not fully consolidated, only sales are settled on a commission basis, lead to a dilution of the margins in percentage terms.
EBITDA
2.0
EUR million
Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to EUR 2.0 million (previous year: EUR 5.1 million), corresponding to a margin of 6.1 %. Earnings before interest and taxes (EBIT) reached EUR -0.2 million (previous year: EUR 2.8 million) and a margin of -0.6 %. In addition to the negative exchange rate effect, the result was primarily affected by the interruptions of production and significant inflation-related cost increases.
The financial result was below the previous year period at EUR -2.2 million (previous year: EUR -2.0 million). The current interest charge amounted to EUR 1.5 million (previous year: EUR 1.3 million). The net result was EUR -3.1 million (previous year: EUR -0.3 million); EUR 0.5 million of this decline was due to exchange rate effects.
Equity ratio
36.8%
The equity ratio was 36.8% on the reporting date (end of previous year: 36.9%). The land values and biomass in Brazil are accounted for in BRL. The current exchange rate change compared to the end of the year had a negative effect on equity. Net debt increased by EUR 1.6 million from the end of the previous year to EUR 47.7 million. This was mainly due to the high level of loan debt in Swiss francs.
Operating cash flow was EUR 0.9 million (previous year: EUR 2.9 million). This includes the change in net current assets of EUR -1.7 million (previous year: EUR -1.9 million). Investments amounted to EUR 1.4 million (previous year: EUR 2.3 million).
Working capital
24.8
EUR million
The circumstances described above again led to an increase in working capital of EUR 0.6 million compared to the end of the previous year. Working capital rose again due to delivery problems in Gabon. Working capital is still far too high and ties up about EUR 7 million more capital than normal. As of the reporting date, working capital amounted to EUR 24.8 million. Inventories of logs and sawn timber fell slightly by EUR 0.9 million. At EUR 14.5 million, accounts receivable were EUR 1.7 million higher than at the end of the year. Accounts payable increased by EUR 0.3 million.
Results of the individual companies: