[TOP STORY] TWK’s Peak Timbers currently benefiting from the Russia / Ukraine crisis

SIMON BROWN: I’m chatting now with Eddie Fivaz. He is the financial director at TWK Agri. Results out [for the] six months ending February. Revenue up 30.6%, earnings per share up 127%, cash from operating activities before changes to working capital up just over 100%.

Eddie, I appreciate the time this morning. A really strong set of numbers. I suppose outsiders would say the agricultural space is having a bit of a boom town – both, for example your timber, but also the farmers who you are supporting and providing services to.

EDDIE FIVAZ: Morning, Simon. Yes. exactly that. It’s a booming time, but even without that, I think TWK proves its ability to move quickly [with] our disciplined approach, customer focus, diversified business model and also our product mix. That helps us even without this booming time to have record results on a year-on-year basis. So it’s not really only the booming time, which obviously did help, but TWK has really shown in the past that we can deliver good results on a year-on-year basis.

SIMON BROWN: Is it diversification? Some sectors are having a less great time, which is to be expected, and some better than others. One of them that really did incredibly well was the timber part. Peak Timbers is in some of these results, as I understand, but still your wood-chip export sales – up over 200%. How much of that was the addition of Peak Timbers and where are you exporting to?

EDDIE FIVAZ: Okay. Peak Timbers really supported our results… .So if you calculate it on a basic earnings per share, it contributed to about R1 / share in terms of earnings per share, So it did help. We are still busy in a process of improving our operations there. We are also going to mechanize the operations there, and that will also improve efficiencies and profits and cash flow from our Peak Timber operation.

But our exports, like you mentioned in terms of wood chips increased by 223%. The main markets are Japan, China, and Spain, but currently we [are experiencing] an increased demand [from] the European countries because of the Ukraine and Russia crisis – because Russia can not export to those countries there’s a demand for that, and that also supports prices. So definitely in the shorter term there will be exports to those markets as well, which will obviously support our profits and we will definitely benefit from that.

SIMON BROWN: I take your point about mechanization. Peak Timbers is certainly bringing, what, you say about R1 out of R5.65. I’m trying to do the maths in my head – a little under 20%. It certainly helped, but you can get even more efficiencies. I remember chatting, I suppose it was six months ago with results, where it was a great asset, but you thought you could make it an even better asset.

Read / listen: Strong numbers from TWK (Nov 2021)

EDDIE FIVAZ: Exactly that. I think TWK does have the expertise in terms of timber operations. We have the ability to manage it very effectively and also on a sustainable basis, and that’s where our focus will be in the coming months to see if we can increase our timber portfolio and also… how we can add value to those products going forward.

SIMON BROWN: Supply chains? Your [Vehicles] and Tires, the [vehicles]I think did fairly well. A good pick up in revenue and margins, and that due to vehicle supply issues. I’ve spoken with the likes of Combined Motor Holdings, Motus, across the board that remains a challenge: simply getting new vehicles onto your showroom floors to sell them.

EDDIE FIVAZ: Yes, it’s still a challenge. What happened in KwaZulu-Natal yesterday with the flooding, with some of those Toyotas [being flooded] (one of the brands that we sell)… will also really impact the sales. But remember we also sell second-hand vehicles. We do the services for different types of vehicles and that supports us, and we also sell Haval. That was a fairly new addition to the portfolio, and the Haval is doing exceptionally well, and that supports our profits there. But still pressure in terms of new vehicle sales, because of availability.

SIMON BROWN: And your retail. You’ve got that retail division as well, obviously aiming at the agricultural sector. Another one which is having a really good period at this moment. You are very strong in the retail.

EDDIE FIVAZ: Yes. Retail is very good. Like I’ve mentioned in the past, we have very good syndication-loan agreements with Standard Bank, Absa and FNB. So we do have access to funding for our farmers. That enables us to penetrate new markets and gain new customers that we can supply our products to. So that’s a very effective business model that supported us. The fertilizer prices went up extremely, and we’ve obviously benefited from that as well.

SIMON BROWN: I take the point on that. There are pressures in some places, and the fertilizer is hurting farmers, but it can benefit…

We’ll leave it there. That’s Eddie Fivaz, the FD at TWK, and we appreciate the early morning time.

SIMON BROWN: I’m chatting now with Eddie Fivaz. He is the financial director at TWK Agri. Results out [for the] six months ending February. Revenue up 30.6%, earnings per share up 127%, cash from operating activities before changes to working capital up just over 100%. Eddie, I appreciate the time this morning. A really strong…

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