North Lincolnshire timber giant Arbor Forest Products’ turnover and profits have shrunk after volumes and prices fell following a spectacular period of growth.
The New Holland operation’s turnover was down more than a quarter from £171.6 million to £125.9 million, as the DIY and landscaping boom brought on by pandemic lockdowns was declared well and truly over. Bosses had predicted the fall back as trading eased towards the end of the previous year.
In the 12 month period to April, sales fell 26.6 per cent from £171.6 million to £125.9 million, as profits of £23.8 million were almost halved, coming in at £12.5 million. And while confidence in the medium to long-term has been expressed, The Lincoln Castle team see no immediate return to the growth witnessed under unique circumstances.
In the strategic report accompanying the results, director Andrew Howarth said: “During the first half of the year, the business continued to see reductions in timber prices, with these being more stable in the second half of the year. Volumes, compared to the previous year – which had seen large demand, especially at the beginning of the prior year – reduced and therefore turnover compared to the prior year was impacted both by volume and a reduction in selling prices.
“Although volumes were lower than the prior year, the mix of sales was more heavily weighted to added value products and products with a higher selling price per square metre relative to commodity products, which saw a larger volume decrease helping to maintain stronger margins.”
Sales came in a shade above those generated in the year to April 2022, having accelerated rapidly. Employee numbers were down from 202 to 183, in line with headcount then too.
Looking ahead, Mr Howarth said: “The general economic outlook remains pessimistic, especially regarding the new housing market and general construction market. Low growth, higher interest rates and lack of consumer confidence are likely to have an impact on demand. This leads to more uncertainty on trading in the shorter to medium term and the business continues to monitor economic conditions and react to the market accordingly.”
The past year saw an automated saw line upgraded and it has vowed that “selective investments to improve efficiency or enhance capability will be considered in the coming year”.
Mr Howarth added: “Management are confident that it will be able to continue to grow in medium to long-term in a controlled and profitable manner despite the competitive market it operates in.”
Parent company Howarth Timber Group, which includes a 35-strong merchant network and specialised engineering division, and is headquartered out of Leeds, saw turnover reduce from £337 million to £295 million, with profits down from £32.5 million to £19.9 million.
Three acquisitions were made in the year totalling more than £20 million. Bentley Holdings, a single branch operation in Manchester; Thomas Ainsworth, a Burnley site and Verdon Timber Group, a five site operation in Leicestershire, all joined, the latter completing days before the year-end.
Original artice – https://business-live.co.uk/all-about/yorkshire-humber