Hong Kong-listed Greenheart Group that owns the 13,000 hectare Mangakahia forestry estate in Northland, New Zealand narrowed its annual loss as the New Zealand unit propped up the forestry group with growing Chinese demand for logs. Source: The National Business Review
The company reported a net loss of HK$60.3 million in calendar 2013 from a loss of HK$144.4 million the year earlier, with a 46% gain in revenue to HK$724.6 million.
Earnings before interest, tax, depreciation and amortisation soared 595% to HK$182.8 million.
Greenheart’s New Zealand unit contributed a 47% gain in revenue to HK$663.8 million, and a 69% increase in EBITDA of HK$323.9 million.
The company is looking for acquisitions “to enhance and strengthen the sustainability of its long-term production profile in New Zealand,” it said.
“The impressive performance of our New Zealand business has helped to partially offset the operating loss incurred in our Suriname divisions and certain one-off losses and expenditure,” chairman Wang Tong Sai said in the report.
“These increases were a result of both increasing log prices and increased logging volumes, mainly fuelled by strong demand from China underpinned by continued demand based on a favourable construction market.”
Chinese demand for raw logs has helped drive New Zealand exports of the commodity 26% to US$4.02 billion in the year ended February, while the seasonally adjusted volume of logs and wood climbed 28% to 1.73 million cubic metres in February.
Greenheart aims to lift its New Zealand harvest to 700,000 cubic metres in 2014 from 662,000 cubic metres in 2013, and expects the unit will remain strong for at least the first-half of the financial year as log prices remain high.
The New Zealand unit lifted export sales volumes 27% to 582,000 cubic metres in 2013, while the average export selling price rose 17% to US$138.4 per cubic metre.
The gain in price accounted for about 73% of the New Zealand unit’s increased sales, with the remainder coming from higher volumes.
Wang said the company was watching economic indicators in China carefully, and adjust logging volumes accordingly.
China’s introduction of the two-child policy and rural land reforms are seen as boosting housing demand, while the US economic recovery and reduced Russian log volumes “could potentially reduce available supply of logs for China and maintain high price levels,” he said.
Greenheart derives about 78% of sales from China, lifting revenue from the world’s second-biggest economy 59% to HK$567.7 million.
The strong Chinese demand for New Zealand pine prompted a fair value gain in the plantation forest assets of HK$108.8 million in the year.
The local assets were valued at HK$876 million as at Dec. 31.
The company acquired the Mangakahia estate from its former parent Sino-Forest in 2011 for US$73 million in shares and debt.
