RusForest’s EBITDA Loss Decreased by 83% in 4Q 2013
OREANDA-NEWS. April 04, 2014. RusForest’s EBITDA loss decreased by 83% in 4Q 2013 at SEK 6.4 million (USD 1 million) compared to 4Q 2012 at SEK 38.8 million (USD 6 million). EBITDA loss from continued operations adjusted for non-recurring items decreased 62% for full year 2013 compared full year 2012, as the company said in the press release received by Lesprom Network.
Magistralny showed good earnings for the 2Q in a row while Arkhangelsk was still negative due to the lack of a market for residual products in 2013. Ust-Ilimsk has leased out the majority of its forest leases to third parties while reviewing the strategy for harvesting operations in the area. In 4Q 2013, Ust-Ilimsk did not quite achieve earnings neutrality through rent income, but additional rent agreements were concluded.
In 4Q 2013 sawlogs and sawnwood sales in m3 from core operations (Arkhangelsk and Magistralny) were down 22% and 8% respectively compared to last year. However, due to a much higher price received for sawnwood in 4Q 2013 compared to 4Q 2012, revenue from sawnwood actually increased by 31% year-on-year from these operations.
For the full year 2013 sawlogs and sawnwood sales in m3 from core operations (Arkhangelsk and Magistralny) increased compared to 2012 and coupled with a higher sawnwood price and stable sawlog price that translated into an increase in revenue of 39% and 26% for sawnwood and sawlog respectively for these operations. Increase in price received for sawnwood in 2013 is mainly due to larger share of sales to premium Japanese market achieved, however, part of the increase in prices was attributable to the change in the pricing structure. Arkhangelsk sawmill started to deliver sawnwood using rented vessels. Therefore, both the price for sawnwood and the distribution cost increased in 4Q 2013 compared with 4Q 2012.
Taking into account revenue from Ust-llimsk unit and other revenue, the Group's total revenue from continuing operations in 4Q 2013 decreased by 10% compared to 4Q 2012, explained by the downscaled Ust-Ilimsk operations in 2013, however, revenue for the full year 2013 was down only 2% compared to 2012 despite the Ust-llimsk reduction. Pulpwood and woodchip sales volumes were negligible due to the restructuring of Ust-Ilimsk and the collapse of pulp production in the northwest. 2012 revenues were restated to exclude discontinued operations.
While revenue from continuing operations in 4Q 2013 and for the full year 2013 was lower compared to previous year, RusForest's gross result improved from a gross loss of SEK 30.9 million (USD 4.8 million) in 4Q 2012 to a gross profit of SEK 7.8 million (USD 1.2 million) in 4Q 2013.
The gross result for the full year 2013 improved to a gross profit of SEK 14.7 million (USD 2.3 million) from a gross loss of SEK 107.6 million (USD 17 million) in 2012. The improvement in Gross Result is achieved through lower costs of sales, main driver of lower cost of sales were efficiency improvements which translated into lower personnel costs, less purchased sawlogs because more harvested ourselves and general impact from phasing out the unprofitable Ust-Llimsk sawmill and planing mill operations.
The Group’s net loss from continuing operations for 4Q 2013 was SEK 89.4 million (USD 13.9 million). Including loss after tax from discontinued operations the Groups total loss for the quarter amounted to SEK 355 million (USD 55 million), compared to SEK 675.5 million (USD 104.8 million) in 4Q 2012.
For the full year 2013 net result from continuing operations amounted to a profit of SEK 44.8 million (USD 7 million) compared to a loss of SEK 657.6 million (USD 102 million) in 2012.
For the full year 2013 the Group’s total loss including discontinued operations amounted to SEK 290 million (USD 45 million).
Matti Lehtipuu, the Company’s Group CEO, commented: “2013 was a turning point for RusForest. The restructuring transaction brought-in Nova Capital as a Russian strategic shareholder in March 2013 and accelerated the turnaround. A number of things have changed and improved over the past year. The new 100,000-ton/year wood pellet mill in Arkhangelsk, the sale of non-core assets and the turnaround in Magistralny all increase our likelihood of reaching positive cash flow later this year. RusForest is beginning the year with a clean slate and clear potential. Unfortunately, recent events between Russia and Ukraine have overshadowed the solid fundamentals of our business. Improving global sawnwood markets, growing wood pellet demand in Europe and the weakening Russian ruble gives RusForest strong momentum for 2014.”
RusForest is a Swedish forestry company operating in Eastern Siberia and the Arkhangelsk region of Russia. The Company controls long-term timber leases and utilizes these resources to produce a wide range of sawnwood products.