What it does

Woodbois Limited (LON:WBI) is an Africa-focused forestry and timber trading company.

It is involved in the production, processing, manufacture and supply of sustainable African hardwood (i.e. beech and blackwood) and hardwood products.

The AIM-listed company manages and operates around 1mln acres of natural forest concessions in Gabon and Mozambique, where it also has manufacturing facilities.

Its products are transported all around the world and used for things such as boat building.

As well as harvesting and producing its own products, Woodbois also sources softwood (pine and redwood) and hardwood products and sells them across the globe.

Change of name reflects a change in focus

Formerly known as Obtala, the company sold off its agriculture business in Tanzania in 2019.

That was part of a move to double-down on the timber trading and production arm of the business, which bosses thought would help attract new investors and trade finance partners.

How it’s doing

In a quarterly update, Woodbois said it has a strong platform to build on following August’s transformational balance sheet restructuring.

The company achieved its revised revenue target of US$15mln for 2020, with US$3.2mln generated in the fourth quarter.

The group noted that it is funded to achieve near term growth objectives with US$2.56mln of cash at the end of December. Working capital was marked at US$9mln.

Woodbois highlighted that its underlying profitability was ahead of expectation prior to write-downs against inventory.

The company pointed out that it produced 2,030 cubic metres of sawn timber in the quarter, and 569 cubic metres of veneer production. Shipments were impacted by constraints in the worldwide freight container market.

It expects to turn cashflow positive, deliver profitability and generate significant revenue growth in 2021.

What the boss says: Paul Dolan, chairman and chief executive

“Following the transformational balance sheet restructuring completed in August and its subsequent financial benefits, we have given ourselves a strong platform to build on and we intend to deliver significant growth in 2021.”

“We remain well-financed and our further strengthening of the operational team during Q4 and in 2021 means that we are well placed to capture the opportunities and build shareholder value.”

“The demand for sustainably sourced timber continues to grow and we believe that our current footprint in Africa, the investment in equipment, processes and industry-leading staff, combine to ensure we are uniquely well placed to increase our market share in global sales and trading.

“The board remains confident of Woodbois’ ability to meet its objective of profitably becoming one of the leaders of the sustainable African hardwood sector.”

Inflexion points

  • Funded to achieve near term growth objectives
  • Underlying profitability was ahead of expectation
  • Significant revenue growth targeted for 2021