Integrated Timber

Integrated Timber

pgbison2-01

PG Bison is the leading decorative wood-based panel producer in Africa, servicing the retail, construction, furniture/kitchen manufacturing, and residential development markets, primarily in southern Africa. We have integrated forestry, timber, and resin manufacturing operations, featuring both primary and secondary upgrading processes.

Our business is market-focused and we take evolving consumer trends closely into account when developing our product ranges. This is an essential feature of our strategy to secure market share and sustainable growth in both existing and new markets.

pgbison2-01

PG Bison is the leading decorative wood-based panel producer in Africa, servicing the retail, construction, furniture/kitchen manufacturing, and residential development markets, primarily in southern Africa. We have integrated forestry, timber, and resin manufacturing operations, featuring both primary and secondary upgrading processes.

Our business is market-focused and we take evolving consumer trends closely into account when developing our product ranges. This is an essential feature of our strategy to secure market share and sustainable growth in both existing and new markets.

Revenue

R4 197 million

up 31%

Operating profit

R615 million

up 90%

Operating margin

14.7%

Value-added product ratio

69%

up 8%

Customer value proposition

Creating value through consumer focus and inspiration, product innovation, customer enablement, and supply chain integration

Revenue

R4 197 million

up 31%

Operating profit

R615 million

up 90%

Operating margin

14.7%

Value-added product ratio

69%

up 8%

Customer value proposition

Creating value through consumer focus and inspiration, product innovation, customer enablement, and supply chain integration

“We are passionate about providing the inspiration, products,
and services needed to create beautiful spaces.”

“We are passionate about providing the inspiration, products, and services needed to create beautiful spaces.”

Gerhard Victor

Chief executive officer, Integrated Timber

“We are passionate about providing the inspiration, products,
and services needed to create beautiful spaces.”

“We are passionate about providing the inspiration, products, and services needed to create beautiful spaces.”

Gerhard Victor

Chief executive officer, Integrated Timber

Gerhard Victor, CEO | Integrated Timber

Gerhard joined PG Bison in 1997 with seven years of previous wood-based panel manufacturing experience, specialising in engineering and mechanisation of manufacturing plants. Gerhard has been instrumental in overseeing several major expansion projects in the PG Bison group including major greenfield developments and brownfield expansions. Gerhard was appointed as the PG Bison group manufacturing executive in January 2009 and as the CEO of PG Bison in December 2014.

Operational review

Operating environment

The Covid-19 pandemic and the resulting lockdowns around the world saw people spending more time at home, fuelling a trend towards making domestic environments as functional and comfortable as possible. The disruptions experienced by our business due to the various levels of lockdown in South Africa and the other markets we serve were offset by this trend, which presented many new opportunities.

Most notably, increased expenditure on renovations and expansions created a worldwide demand for wood-based products and, at present, local demand outstrips supply. Furniture imports have also reduced significantly due to disrupted global supply chains, increasing demand for locally manufactured furniture.

Within this context, our business strategy once again proved its mettle. By focusing on the integration of the supply chain, continuous innovation, and producing high-quality value-added products to create beautiful spaces, we were not only able to meet the challenges presented by the pandemic, but to increase revenue and improve profitability.

This positive performance was supported by our decision to reposition the PG Bison brand in order to give it a consumer focus, which has strengthened our competitive advantage. The demand for our products across all categories led to a gain in market share, which is being supported by our focus on customers, converters, and consumers. We will continue to focus on developing downstream markets to create demand for our products.

Despite the constraints that the Covid-19 lockdown restrictions placed on operations, we increased production volumes significantly during the course of the reporting period to meet the rapid increase in demand.

Demand nevertheless continues to exceed supply and we are currently operating on a sales allocation system to secure some service consistency for our customers. This is likely to remain in place until January 2022, when approximately
300 m3 per day of additional particleboard capacity will be commissioned.

Forestry

Our plantations continue to be essential in the security of our supply chain and growing our market share. The total value of our plantations did, however, decrease by R204 million during the reporting period, mainly due to a reduction in sawlog prices and increased costs.

Value added

With the resource and manufacturing elements of our supply chain secure, our key focus remains on enhancing our capacity to add value at both primary and secondary processing stage. We are therefore currently executing a number of investments into our production capabilities.

The first phase of a R1.2 billion upgrade to our particleboard plant in eMkhondo (Piet Retief) was completed at the end of FY17 and the second phase is on schedule to be commissioned in January 2022. This will increase the plant’s capacity by 43% and increase our overall particleboard capacity by 18% to meet growing demand. A second gloss line and an additional melamine-faced board (‘MFB’) line will also be added in FY23.

We have also approved an investment of R1.9 billion into a new medium-density fibreboard (‘MDF’) plant and we are in the process of finalising statutory approvals and government incentives prior to commencing the implementation of the project. The plant is due for commissioning in July 2024 and will increase our MDF capacity considerably.

To ensure that we produce products of the highest quality on a consistent basis, we adhere to a programme of scheduled maintenance throughout all of our operations. During the reporting period, our MDF plant in Boksburg and our particleboard plant in Ugie successfully underwent scheduled annual maintenance shutdowns. The annual maintenance shutdown of the eMkhondo plant is scheduled to coincide with the commissioning of the upgrade at that plant.

Highlights of 2021

Production recovered to record levels after the first Covid-19 lockdown was eased.

There was a resurgence in demand for locally manufactured goods.

Expansion capex for a seventh MFB press and a second gloss line was approved and the equipment was ordered.

The second phase of a R1.2 billion investment into the eMkhondo (Piet Retief) plant is nearing completion, on time and on budget. Production will commence in January 2022.

Our new gloss range has been well received by both existing and new consumers.

map-timber-new-01

Operational review

Operating environment

The Covid-19 pandemic and the resulting lockdowns around the world saw people spending more time at home, fuelling a trend towards making domestic environments as functional and comfortable as possible. The disruptions experienced by our business due to the various levels of lockdown in South Africa and the other markets we serve were offset by this trend, which presented many new opportunities.

Most notably, increased expenditure on renovations and expansions created a worldwide demand for wood-based products and, at present, local demand outstrips supply. Furniture imports have also reduced significantly due to disrupted global supply chains, increasing demand for locally manufactured furniture.

Within this context, our business strategy once again proved its mettle. By focusing on the integration of the supply chain, continuous innovation, and producing high-quality value-added products to create beautiful spaces, we were not only able to meet the challenges presented by the pandemic, but to increase revenue and improve profitability.

This positive performance was supported by our decision to reposition the PG Bison brand in order to give it a consumer focus, which has strengthened our competitive advantage. The demand for our products across all categories led to a gain in market share, which is being supported by our focus on customers, converters, and consumers. We will continue to focus on developing downstream markets to create demand for our products.

Despite the constraints that the Covid-19 lockdown restrictions placed on operations, we increased production volumes significantly during the course of the reporting period to meet the rapid increase in demand.

Demand nevertheless continues to exceed supply and we are currently operating on a sales allocation system to secure some service consistency for our customers. This is likely to remain in place until January 2022, when approximately
300 m3 per day of additional particleboard capacity will be commissioned.

Forestry

Our plantations continue to be essential in the security of our supply chain and growing our market share. The total value of our plantations did, however, decrease by R204 million during the reporting period, mainly due to a reduction in sawlog prices and increased costs.

Value added

With the resource and manufacturing elements of our supply chain secure, our key focus remains on enhancing our capacity to add value at both primary and secondary processing stage. We are therefore currently executing a number of investments into our production capabilities.

The first phase of a R1.2 billion upgrade to our particleboard plant in eMkhondo (Piet Retief) was completed at the end of FY17 and the second phase is on schedule to be commissioned in January 2022. This will increase the plant’s capacity by 43% and increase our overall particleboard capacity by 18% to meet growing demand. A second gloss line and an additional melamine-faced board (‘MFB’) line will also be added in FY23.

We have also approved an investment of R1.9 billion into a new medium-density fibreboard (‘MDF’) plant and we are in the process of finalising statutory approvals and government incentives prior to commencing the implementation of the project. The plant is due for commissioning in July 2024 and will increase our MDF capacity considerably.

To ensure that we produce products of the highest quality on a consistent basis, we adhere to a programme of scheduled maintenance throughout all of our operations. During the reporting period, our MDF plant in Boksburg and our particleboard plant in Ugie successfully underwent scheduled annual maintenance shutdowns. The annual maintenance shutdown of the eMkhondo plant is scheduled to coincide with the commissioning of the upgrade at that plant.

Highlights of 2021

Production recovered to record levels after the first Covid-19 lockdown was eased.

There was a resurgence in demand for locally manufactured goods.

Expansion capex for a seventh MFB press and a second gloss line was approved and the equipment was ordered.

The second phase of a R1.2 billion investment into the eMkhondo (Piet Retief) plant is nearing completion, on time and on budget. Production will commence in January 2022.

Our new gloss range has been well received by both existing and new consumers.

map-timber-new-01

Products and services

Forestry

Sawlogs, poles, pulpwood

Primary processing
Timber

Structural timber, poles

Board

Particleboard, medium-density fibreboard (‘MDF’)

Resin

Formaldehyde and UF resin (used primarily in the timber panel industry)

Treated paper

Used only in the wood-based panel industry to manufacture MFB

Secondary processing
Decorative panels

Gloss-coated board
Matt-coated board
Melamine-faced board (‘MFB’)
Foil-faced board
Worktops

Products and services

Forestry

Sawlogs, poles, pulpwood

Primary processing
Timber

Structural timber, poles

Board

Particleboard, medium-density fibreboard (‘MDF’)

Resin

Formaldehyde and UF resin (used primarily in the timber panel industry)

Treated paper

Used only in the wood-based panel industry to manufacture MFB

Secondary processing
Decorative panels

Gloss-coated board
Matt-coated board
Melamine-faced board (‘MFB’)
Foil-faced board
Worktops

How we add value

  • We produce innovative, high-quality, value-added products that reflect global consumer and design trends.
  • We secure market differentiation through constant innovation in our products, services, marketing, sales, and supply chain.
  • We use the latest technologies and processes in order to maximise efficiency and consistently deliver the best value for money.
  • We adhere to international quality standards in all aspects of production.
  • We have an integrated supply chain, which ensures that we always have ready access to the timber, resin, and paper that we use to produce our products.

How we add value

  • We produce innovative, high-quality, value-added products that reflect global consumer and design trends.
  • We secure market differentiation through constant innovation in our products, services, marketing, sales, and supply chain.
  • We use the latest technologies and processes in order to maximise efficiency and consistently deliver the best value for money.
  • We adhere to international quality standards in all aspects of production.
  • We have an integrated supply chain, which ensures that we always have ready access to the timber, resin, and paper that we use to produce our products.

Innovation

We regularly evaluate our product line in relation to evolving consumer trends. In line with this strategy, we develop exclusive MFB colours and finishes with the input of local and international designers to meet the needs of our specific markets.

We update our product range every second year and, during the final quarter of the 2020 financial year, we launched an entirely new range. This new season of unique designs, colours, and finishes brought to market fresh looks inspired by the desire to create safe, welcoming spaces that reflect the perennial beauty of the natural environment. The range has been exceptionally well received, which is evident from the improvement to our value-added product ratio growth during the reporting period.

The range includes a unique innovation, a matt-coated MFB with an antibacterial additive, which is exclusive to PG Bison.

Certification and accreditation

All of our panel production lines are ISO 9001 certified and our NECF plantations in Ugie continue to be accredited by the FSC. PG Bison is also a member of the South African Furniture Initiative (‘SAFI’), and the Proudly South African programme.

Looking ahead

Covid-19 has fundamentally changed the way in which the world works, lives, and plays. We anticipate that consumer focus on the integration of home, work, and social environments will continue to be a fundamental feature of the market and we foresee that demand is likely to continue outstripping supply in the short and medium term.

Further, civil unrest during July 2021 caused extensive damage to large-scale shopping malls, schools, warehouses, and furniture retailers, and this is likely to fuel further demand for our products.

Bearing these market conditions in mind, we will continue to implement our five-year growth plan, which is aimed at improving market share within existing markets as well as entering into new markets. We aim to achieve this through continued investment in our production capabilities as well as by developing and introducing new products.

Key facts

More than 3.5 million trees planted in FY21.

PG Bison is a member of the Proudly South African initiative.

proudly-sa-01
proudly-sa-01

Innovation

We regularly evaluate our product line in relation to evolving consumer trends. In line with this strategy, we develop exclusive MFB colours and finishes with the input of local and international designers to meet the needs of our specific markets.

We update our product range every second year and, during the final quarter of the 2020 financial year, we launched an entirely new range. This new season of unique designs, colours, and finishes brought to market fresh looks inspired by the desire to create safe, welcoming spaces that reflect the perennial beauty of the natural environment. The range has been exceptionally well received, which is evident from the improvement to our value-added product ratio growth during the reporting period.

The range includes a unique innovation, a matt-coated MFB with an antibacterial additive, which is exclusive to PG Bison.

Certification and accreditation

All of our panel production lines are ISO 9001 certified and our NECF plantations in Ugie continue to be accredited by the FSC. PG Bison is also a member of the South African Furniture Initiative (‘SAFI’), and the Proudly South African programme.

Looking ahead

Covid-19 has fundamentally changed the way in which the world works, lives, and plays. We anticipate that consumer focus on the integration of home, work, and social environments will continue to be a fundamental feature of the market and we foresee that demand is likely to continue outstripping supply in the short and medium term.

Further, civil unrest during July 2021 caused extensive damage to large-scale shopping malls, schools, warehouses, and furniture retailers, and this is likely to fuel further demand for our products.

Bearing these market conditions in mind, we will continue to implement our five-year growth plan, which is aimed at improving market share within existing markets as well as entering into new markets. We aim to achieve this through continued investment in our production capabilities as well as by developing and introducing new products.

Key facts

More than 3.5 million trees planted in FY21.

PG Bison is a member of the Proudly South African initiative.

proudly-sa-01

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