York Timber Holdings Limited · JSE:YRK
York Timber — H1 2013 Earnings Presentation
25 slides from York Timber's earnings presentation, March 2013
Slide 1: Investor Presentation: Interim Results December 2012
Investor Presentation Interim Results December 2012 March 2013
Slide 2: Agenda
Introduction Results Market Overview Operational Overview Growth Strategy Investment Rationale
Slide 3: Introduction
Introduction Events impacting 6 months under review: • Industrial action – transport strike and strike at log supplier (KLF). • Natural disaster – ca. 700ha increase in temporary unplanted area. Firm set of results in tough market. • Softening lumber market – decline of 2% against comparative period
Slide 4: Board Appointments
Board Appointments Thabo Mokgatlha Jim Myers Dinga Mncube Appointment effetive 6 March 2013
Slide 5: Agenda
Introduction Results Market Overview Operational Overview Growth Strategy Investment Rationale
Slide 6: Interim Financial Results - Highlights
Interim Financial Results - Highlights • Revenue up 5%, driven by higher selling prices for lumber and plywood • Gross profit maintained at 36% Earnings levels • Cash generated up R8,4 million to R10,1 million maintained in a tough environment. • Profit before tax up 14,6% Positive cash • EPS and HE
Slide 7: Interim Financial Results – year on year comparison
Interim Financial Results –year on year comparison • Revenue growth due Dec 2012 results variance to improved pricing. from prior period Dec 2011 • EBITDA growth due Revenue R’000 5% to favourable pricing and cost control. EBITDA Margin % -1% • Good results from EBITDA R’000 3% processing on the EBI
Slide 8: Interim Financial Results – year on year comparison
Interim Financial Results – year on year comparison R’000 Results for the six months ended Dec – 12 % change Dec -11 % change Dec -10 • Biological asset Group revenue 590 703 5% 564 799 15% 491 096 valuation now Gross profit 211 074 4% 203 013 1% 201 518 includes Contributory Asset Charge. Gross pro
Slide 9: Interim Financial Results – Income Statement Movement
Interim Financial Results – Income Statement Movement R120 000 R100 000 R80 000 R60 000 R40 000 Profit before tax R'000 R20 000 R0 Dec-10 Dec-11 Dec-12 (R20 000) (R40 000) (R60 000) (R80 000) (R100 000) Operating profit Loss on non-current assets held for sale Fair value adjustments Investment incom
Slide 10: Agenda
Introduction Results Market Overview Operational Overview Growth Strategy Investment Rationale
Slide 11: Building Industry Dynamics
Building Industry Dynamics Building and construction value flow • Total spend in building and construction is ca. R351 billion • Construction remains the largest sector compared to combined residential and non-residential. • R211 billion spent on materials including lumber and plywood. • York does n
Slide 12: Market Drivers and Lead Indicators
Market Drivers and Lead Indicators Building Plans Passed & Buildings Completed Net Building in the Pipeline Key Drivers Mortgage Advances – year on year growth rate • Building plans passed and buildings completed levels remain steady Prime Interest rate • Net buildings in the pipeline remains positi
Slide 13: Government Spending – Human Settlements (Residential)
Government Spending – Human Settlements (Residential) Loans to affordable housing segment Infrastructural grants Loans to affordable sector: R72 000 R 20.50 R70 000 R 19.50 • Declining trend is of R 18.50 R68 000 concern. R’Bn R 17.50 R66 000 R 16.50 R64 000 R 15.50 Infrastructure grants: R62 000 R
Slide 14: Market Overview – Lumber Industry Statistics
Market Overview – Lumber Industry Statistics Industry Volume (m3) & York Market Share % Lumber Price Index : Industry and York York shows strong 900 000 24.4% price growth while 2600 850 000 maintaining market 22.4% 2500 share in a softer 800 000 20.4% 2400 market. 750 000 18.4% 2300 Market demand 7
Slide 15: Market structure and need for consolidation
Market structure and need for consolidation Market Share – Softwood Sawmills Processors in South Africa Significant consolidation has taken place at the level of York’s customer base – Iliad, Build-It, Massmart, Cashbuild. Cost competitiveness key to sustained profitability. Very inefficient lumber
Slide 16: Agenda
Introduction Results Market Overview Operational Overview Growth Strategy Investment Rationale
Slide 17: Operational Overview – Cost
Operational Overview – Cost York cost of production per cubic metre vs. PPI (Indexed to July 2010) 1.15 1.10 1.05 1.00 0.95 0.90 0.85 Actual: 3 Month Ave Production Cost m³ Timber (indexed) Actual:3 Month Ave Production Cost m³ Plywood (indexed) • York cost trend contained well below PPI • PPI for d
Slide 18: Operational Overview – Wage Rates
Operational Overview – Wage Rates Wage Rate Comparison Industry wage impact Wage change likely to R 200 • New minimum wage rate implemented without full have significant understanding of cost to business .. impact on industry R 180 • Other benefits ignored in wage day rate and York. determination an
Slide 19: Agenda
Introduction Results Market Overview Operational Overview Growth Strategy Investment Rationale
Slide 20: Growth Strategy – Raw material optimisation
Growth Strategy – Raw material optimisation Unutilised fibre – less than optimal value generated Fibre has same cost as saw-log yet Value of % m3 % of Value Volume % of generates little value. Product Type 3 Plantatio Processing Plants produce Plantation R/m3 per m % Turnover n d volumes Unutilised
Slide 21: Growth Strategy: Sabie Integrated Site
Growth Strategy Sabie Integrated Site – concept start 2011 Integrated site has DFA approval. Environmental Impact Assessment underway – Sep 2013. Significant competitive advantage: • Logistical cost savings. • Optimal use of raw material. • Cost leader in southern hemisphere. Revenue streams: • Coge
Slide 22: Agenda
Introduction Results Market Overview Operational Overview Growth Strategy Investment Rationale
Slide 23: Investment Proposition: Why York and Why forestry
Investment Proposition Why York and Why forestry York presents • Company well positioned to benefit from change in market dynamics – York set consistent cash to lead: generation in the – Industry consolidation medium term. – Integrated fibre utilisation strategy Strong growth in cash – Consolidation
Slide 24: Investment Rationale
Investment Rationale York offers a platform York’s value add for future growth • York trades at a market to book value ratio of 401c to 671c of 60%. – Recent forestry land transactions in Mpumalanga indicate that York’s value Investing to improve should be substantially higher. EBITDA generating • P
Slide 25: Thank you
a\ YORK TIMBERS Thank you