Allied Timbers geared for growth 

Source: Allied Timbers geared for growth | The Herald January 21, 2020

Allied Timbers geared for growth

Martin Kadzere
ALLIED Timbers has registered “substantial milestones” over the past six months and is now gearing for growth, according to acting chief executive Remigo Nenzou.

Mr Nenzou, seconded by the board after the dismissal of former CEO Dr Daniel Sithole, believes Allied – which prior to June last year – was facing various operational challenges including mounting debts and subdued output, was turning around the corner.

Production capacity has expanded from as low as 10 percent to around 50 percent after the company re-hired saw millers – now accounting for 70 percent of output.

Allied had abandoned contract milling in 2016, which was meant to cover for production shortfalls since the company did not have adequate production capacity.

However, output remained low after the company failed to acquire its own equipment.
There were also concerns that poor monitoring of harvesting by contractors was resulting in unsustainable cutting down of trees with no corresponding replanting.

Allied Timbers recently invested in new machinery and has also refurbished its saw mills at Erin Estate and the Mutare factory. It will soon declare a dividend to Government.

“This has led to restoration of margins and improved cash flows, which have enabled us to clear our debts including salary arrears and statutory payments,” said Mr Nenzou in an interview after the re-launch of the company’s website in Harare last week.

“Production has improved and we now comfortably sit on a stockpile which can take us for three months. This means we can satisfy market requirements for the next three months without even cutting down a single tree.”

Mr Nenzou said the company was at an advanced stage to invest more in plant and machinery and would soon acquire two state of the art saw mills that will be deployed at Nyanguri and Cashel Estates. This would see the company more than doubling production of kiln dried timber from about 3 000 cubic metres to 6 500.

“We need to invest in our own equipment because we believe contract milling is unsustainable since contractors are taking a big chunk of total output,” Mr Nenzou noted.

Allied chairman Mr Itayi Ndudzo, said while the company was in “a very good space”, it was, however, grappling with some challenges including illegal settlers, which continue posing threats of destructive veld fires as well as rampant wood poaching.

“Illegal settler is rampant but that is a broad policy issue. We have court orders for their eviction but you know there are certain socio-political interventions from time to time. The Government has, however, taken a position that they are in the process of finding places where they can accommodate these people. They are occupying land which we ought to be using productively,” said Mr Ndudzo.

“We also have a challenge relating to the deficit in our planting. It’s a culmination of what has happened over many years; two decades, so to say. But those cannot be resolved in a season or two. But our current strategy is that in short term we will be adhering to the best practices in terms of unplanted areas,” he added.

Allied Timber would deploy technology that will enable it to plant throughout the year. This year, the company is targeting 3 000ha and 5 000ha next year and beyond.

“Planting is a function of money and right now money is not our problem. This has a big impact in our ability to plant. There has also been an adoption of better varieties in terms of species that we plant. What we don’t know is the rate at which the economy will phenomenally grow. But at the current rate and if these measures are embraced, we will be able to avert the potential shortage,” said Mr Ndudzo.

The acquisition of new saw mills will be under two arrangements; one being a Built Operate and Transfer while funds to buy the other plant will be raised through disposal of overgrown trees which are not easily accessible due to poor road infrastructure.

Allied is a State-owned company with more than 10 estates in Manicaland, Midlands and Matabeleland provinces. It was born out of Forestry Commission in 2003. The idea of unbundling the commission was to separate regulatory activities from commercial activities. The intention was to enable both institutions to effectively pursue their mandates, with funds from the commercial wing supposed to assist in funding regulatory functions.

The commercial wing gave rise to Forestry Company of Zimbabwe, later re-branded to ATZ while regulatory activities were reconstituted into Forestry Commission.

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