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Fires, consumer strains, and El Niño have all contributed to a challenging financial year for the diversified agriculture and forestry company, TWK Investments Limited.
“This has been an unusual and challenging year for TWK Investments. Our results reflect the challenging trading environment that persisted throughout the year,” said André Myburgh, CEO of TWK. “Despite the devastating impact on the timber segment from a fire at a neighbouring facility at the start of the financial year, the prolonged financial strain on consumers due to high interest rates and unemployment, and the negative effects of El Niño on producers affecting other segments, the group continued to execute its stated strategy.”
TWK reported a 7,08% increase in revenue to R8,52 billion (Aug 2023: R7,96 billion), with a slight decrease of 0,9% in earnings before interest, tax, depreciation and amortisation (EBITDA) to R589,4 million (Aug 2023: R594,8 million) for the year ended 31 August 2024.
Financial report
The timber segment’s revenue increased by 2,37% to R2,99 billion (Aug 2023: R2,92 billion), although timber sales volumes fell by 40,3% to 917 819 tonnes (Aug 2023: 1 536 948 tonnes) due to the Richards Bay fire, plantation fires affecting two major customers, and significant declines in the industrial and mining timber markets.
Revenue for the retail and mechanisation segment decreased by 3,04% from R2,99 billion (Aug 2023) to R2,90 billion, impacted by lower sales volumes across retail and mechanisation operations. This was marginally offset by a 4,47% increase in sales volumes from Constantia Fertiliser.
The financial services segment’s revenue increased by 4,09% from R272,73 million in August 2023 to R283,89 million, with EBITDA increasing by 22,79% to R132,93 million from R108,26 million (Aug 2023). The total crop insurance premium increased by 0,6%, resulting in a 0,5% rise in commission received. Despite macroeconomic challenges, new client acquisitions contributed to a 0,5% increase in insured clients.
The grain segment’s revenue and EBITDA increased by 35,22% from R1,76 billion (Aug 2023) to R2,38 billion and 17,38% from R55,84 million (Aug 2023) to R65,55 million, respectively. Myburgh said the stronger results were attributable to the performances of grain storage and grain marketing operations, offset by losses in the industrial mill businesses due to the high white maize price during the year. Headline earnings per share decreased by 3,89% to 674,17 cents (Aug 2023: 701,43 cents).
Environment, social and good governance
Myburgh said environmental, social and governance (ESG) is playing an increasingly important role at TWK, and its significance will continue to grow. “It is critical to monitor our outputs to ensure that we are benefitting nature.”
Carbon emissions have been a major concern for the timber industry and TWK’s clients. “We are already complying with a long list of specifications from our export clients, ensuring that we remain within acceptable carbon output parameters.”
Additionally, TWK has started monitoring its power usage, comparing traditional energy sources with new solar technologies. “We are also trying to minimise carbon emissions by comparing the number of trees felled with replacement trees,” Myburgh said – Susan Marais, Plaas Media
