RusForest managed to increase revenue and average lumber prices in Q1 2013

RusForest, a Swedish forestry company with operations in Russia, released its first quarter 2013 interim report. Revenue increased by 43% to SEK 156.9 million (€18.26 million), net profit after the bond restructuring amounted to SEK 188.1 million (€21.89 million).

Garrett Soden, the Company’s CEO, commented, “We made significant progress in the first quarter of 2013 by increasing production volumes, reducing our EBITDA loss and closing the restructuring transaction. We raised approximately $28 million and brought-in Nova Capital as a Russian strategic shareholder. With the subsequent sale of non-core assets for aggregate proceeds of $7 million, we have removed loss-making operations from the Group and can now focus on improving our core operations.”

USD prices for spruce and red pine traditional lumber items from Eastern Russia have increased slightly during the past year, as quoted in the report. “In 2013, we expect to see significant growth in the Japanese market, due to product changes underway at the Boguchany and Magistralny mills and continued reduction in the Middle East market. These market changes are key steps in significantly increasing the company’s FOB millgate average lumber selling price,” Mr Soden said. RusForest’s average prices in Q1 were SEK 1396 for lumber (€162), SEK 318 for sawlogs (€37), SEK 97 for pulpwood (€11) and SEK 175 for chips (€20).

RusForest is actively working to change the company’s customer base – away from low-priced commodity markets in North Africa and the Middle East and towards higher priced, specialty product markets in Europe, China, Central Asia and Japan. Company’s sales in the Middle East this quarter fell from 37% to 21%, while European deliveries increased from 25% to 33%, Central Asian – from 2% to 18%.

In Q2 2013, the company is going to further integrate its Siberian lumber sales with the existing Nova Capital sales organization and by doing so, benefit from Nova’s existing experience and reputation in the Japanese market in order to obtain higher price realizations for red pine lumber. In order to enable the required changes to Boguchany and Magistralny lumber production, grading and shipping processes, RusForest has strengthened mill quality control, sales and shipping departments.