| Wed 30 Jun 2004, 11:16 | | YORKOR - PRESS RELEASE |
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YORKOR - PRESS RELEASE: YORKCOR PUTS STRATEGIC FOCUS ON ALTERNATIVE TIMBER
SUPPLIES, CHALLENGES FORESTRY PRIVATISATION
The Yorkor Timber Organisation Limited
(Reg. No. 1916/004890/06)
JSE Share code: YRK
ISIN: ZAE000008108
YORKCOR PUTS STRATEGIC FOCUS ON ALTERNATIVE TIMBER SUPPLIES, CHALLENGES FORESTRY
PRIVATISATION
JSE-listed forestry products group Yorkcor has unveiled a new strategic plan
aimed at diversifying its lines of timber supply in an increasingly concentrated
forestry supply market.
The strategy could involve acquiring its own plantations, strengthening its
relations with independent growers, and importing logs through the upgraded
Maputo harbour, says Yorkcor chairman Solly Tucker, writing in the company`s
2003 annual report.
This is in addition to the supply of sawlogs from state-owned Safcol or its
wholly-owned subsidiary, Komatiland Forests, whose attempts to rescind Yorkcor`s
evergreen supply contracts have been defeated in the High Court. Safcol has
appealed against the judgment in favour of Yorkcor to the Supreme Court of
Appeal.
Plans are also being developed to introduce BEE groups to the enterprise, and to
extend trading activities by making its warehousing and marketing infrastructure
available to other suppliers of timber products.
This strategy `is designed to assure the long-term growth and profitability of
the company,` comments Tucker. He says the group is currently negotiating to
acquire a well managed pine forest in Mpumalanga, and other such acquisitions
are underway. If successful, the pine forest acquisition would benefit
communities surrounding the Yorkcor sawmills.
Other plans include expanding the group`s timber trading activities, which last
year accounted for 15% of group revenue and 10% of operational profits. This
business counters any reliance on round logs for processing marketable timber
and will be energetically developed.
In extensive arbitration proceedings during the year the group won an award of
R37,4 million from the Department of Water Affairs and Forestry (DWAF) which had
sought to cancel York Lumber`s evergreen log supply contract near Bushbuckridge
in Mpumalanga. The award, which was paid this month, more than doubles Yorkcor`s
current assets and furnishes the seed capital to acquire substantial upstream
plantations and new businesses.
The award was worth 339c per Yorkcor share at a time when the market price stood
at 200c. The share price has risen 50% since then and net asset value per share
grew to 761c from 506c at the start of the financial year.
Tucker says the group is unique among sawmillers in that the validity of its
`evergreen` sawlog supply contracts with state-owned forestry group Safcol have
been upheld by the High Court. Though the court decision is under appeal by
Safcol, it nevertheless counters speculation and uncertainly which has bedeviled
the industry for so long and underpins Yorkcor`s effectiveness in the market
place.
Accordingly, Yorkcor does not intend to rely on supplies from Safcol, although
there are positive initiatives to settle differences. The ongoing conflict could
`seriously impact the privatisation of Komatiland,` says Tucker.
In the annual report, Tucker reaffirms the group`s intention to challenge the
state`s planned sale of forestry supplier Komatiland to the Bonheur Consortium
on the grounds that this would create a monopoly. Bonheur, 70% owned by US
resources group Global Forest Products (GFP), was announced as the preferred
bidder for Komatiland in March this year.
Tucker says Yorkcor intends joining other forestry products companies in
challenging the Komatiland privatisation at the Competition Commission.
A merger of Komatiland and GFP would give it control of nearly 75% of softwood
sawlog plantations and more than 25% of milling capacity in the Mpumalanga and
Limpopo regions. `GFP already has a dominant position in sawmilling capacity in
the region and it can be expected that in the long term very few GFP sawlogs
would be available on the open market in the region,` says Tucker.
Tucker dedicates much of his annual review to the group`s ongoing legal battles
with Safcol, but there is renewed optimism that these disputes will soon be
resolved.
Yorkcor reported a 24% increase in turnover to R116, 8 million (2003: R94, 4
million) and a 10-fold increase in profit to R33, 5 million, which includes the
arbitration award from the DWAF.
Interest bearing debt increased to R10, 4 million from R2, 8 million, mainly due
to the redemption of R4 million in preference shares and the financing of newly
acquired sawmills.
National softwood lumber sales increased by 27,7% to 2,3 million cubic metres
(2002: 1,8 million cubic metres), and average selling prices increased by as
much as 11,6%. South African pine lumber continued to sell at better prices than
its American rival, Southern Yellow Pine. The forestry sector`s export
performance was hurt by the strong rand, less so in the case of Yorkcor.
Earnings per share for the year amounted to 303,2c while headline earnings were
9,9c compared with 23,8c the previous year.
The York Lumber mill near Bushbuckridge experienced difficulties in preparation
for winding up its operations, in light of the DWAF`s discontinuation of supply
to the mill after 31 December 2006. Operational difficulties were also
experienced at the newly acquired Roburnia Forest Products sawmill in Mpumalanga
due to faulty installations imported by Yorkcor`s Malaysian predecessors. The
group has invested in more reliable technology at Roburnia, which is expected to
produce profits as it comes on stream this month. Yorkcor`s three established
sawmills achieved relatively good results.
Looking forward, Tucker says Yorkcor intends to focus on bottom line,
sustainable profitability and the development of its niche markets, both locally
and overseas.
Ends
ISSUED FOR: THE YORK TIMBER CORPORATION LIMITED (YORKCOR)
CONTACT: Solly Tucker, Chairman: 012 804 9730 / 083 456 9900
FAX NO: 012 804 8611
E-MAIL: solly@yorkcor.co.za
WEBSITE: www.yorkcor.co.za
ISSUED BY: TISH STEWART PR ASSOCIATES
CONTACT: Tish Stewart 011 325 4195 / 082 443 6399
FAX NO: 011 325 4199
E-MAIL: tish@tspr.co.za
30 June 2004
Date: 30/06/2004 11:01:04 AM Produced by the JSE SENS Department
