Timber importer Arbor Forest Products saw turnover increase by more than a third to £171.7 million as strong price inflation fused with continued high demand for landscaping and DIY.
But the northern Lincolnshire giant, behind the processing and sale of the wood it welcomes into the UK, has warned boom times for the industry may be over. The New Holland operation, part of the Howarth Timber Group, added £46 million to the sales top line, a 37 per cent uplift on 2021, with operating profit also up 65 per cent from £17.8 million to £29.5 million.
Increased efficiencies, aided by investment in a capacity-boosting high speed photo-graded sawline, were highlighted with higher turnover further contributing. It also saw staff numbers pass 200, up to 202 from 184 in the year to March 31.
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Andrew Howarth, director, said: “The first quarter of the financial year started strong with high demand across the product portfolio, good stock availability and rising timber prices. This results in higher sales and margin, and efficient production and distribution.
Timber prices peaked in July 2021, and this led to reduced demand on core timber products due to the market reaction, and also the consensus that the prices had peaked and would correct downwards.”
He said this kicked in by September “with sharp corrections across commodity-based timber during quarter three of our financial year and volumes lower than forecast in this period”. Mr Howarth said: “Prices were more stable in our final quarter, though impacted with price increase in MArch post the invasion of Ukraine.”
He said price inflation accounted for a “large proportion” of the growth, though while volumes were similar year-on-year, there had been a heavier weighting to more added value products.
Looking ahead, the timber merchant said: “The business has benefited in the prior two years from the high demand for landscaping products and DIY whilst the UK was under Covid restrictions, and this appears to be having an impact on the current year as consumers switch spend to leisure and other items. The general economic outlook is also more pessimistic, with low growth, higher interest rates and the threat of recession likely to have an impact on demand. This, along with timber price volatility is leading to more uncertainty on trading in the short term to medium term and the business continues to monitor economic conditions and react to the market accordingly.
“Arbor Forest Products will continue to invest in both plant and machinery and site capacity to meet a growing demand for its products and management are confident that it will be able to continue to grow in the medium to long term in a controlled and profitable manner, despite the competitive market it operates in.”
A replacement saw line is a highlight of the current financial year, while the business has also introduced its ‘Warehouse on Wheels’ concept with job creation and environmental efficiencies.
Group-wide, revenues were up at an almost identical level, 36 per cent, from £247.8 million to £337.3 million, with “an excellent year” highlighted with “high demand from both trade and retail customers”. Operating profit was up 71 per cent from £23.9 million to £40.9 million.
The Leeds-headquartered operation added a new branch in East Yorkshire, with the acquisition of Boards (Cottingham) Ltd, taking it to 34 locations. Arbor remains the largest element, with the merchanting business bringing in £140.4 million. Its engineering services arm bounced back well from a Covid dip, up from £16.8 million to £31.4 million in revenues.
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