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Exchange Losses, Cyclone Idai Plunges Border Timbers Into Abyss


Cyclone Idai, currency changes and excessive load-shedding has weighed heavily in timber production concern, Border Timbers’ operations resulting in heavy losses, the company’s 11 months trading update has revealed.

As a result of the heavy torrents that hit parts of Manicaland, Border Timbers’s Charter sawmill in Chimanimani ceased to operate only to resume operations early May, a development that affected production and ultimately sales volumes.

Electricity constraints compounded matters for the timber producer.

In its 11 month trading update to 31 May 2019, the company posted a net loss before tax of ZWL$ 9 .811 million as compared to ZWL$ 340 696 loss recorded June 30 2018.

“Net loss before tax is a result of unrealized exchange losses on foreign debts amounting to ZWL 10 783 796. The loss before tax for the 11 months to May 2019 excludes the effects of the final biological asset valuation which will be conducted at year end,” Judicial manager, Peter Lewis Bailey said in a statement accompanying company trading update.

“Lumber production is lower compared to same period prior year due to low production in the months of December 2018 to April 2019 at one of our sawmills caused mainly by the general power outages and Cyclone Idai devastating effects that occurred on 15 March 2019. The knock-on effect of the cyclone resulted in the Charter sawmill resuming operations in the first week of May 2019, thereby negatively affecting both production and sales into the market as the road infrastructure was decimated,” he added.

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The company said sales volumes were higher due to increased demand on the local and export markets.

Higher sales volumes were achieved out of sales from buffer stock.

However, revenue saw positive improvement compared to prior comparable period mostly driven by improved quality hence better average selling prices (ASP) on lumber.

Despite restoration of electricity supply in Cyclone Idai affected areas, broken road infrastructure linking the company’s Chimanimani operations with markets remain the biggest challenges, as the rainy season fast approaches.

Most parts of Manicaland were severely hit by heavy torrents earlier this year, destroying major infrastructure, including timber plantations.

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