Five very good years

The headline of the 2015 balance sheet analysis for 2007-2013 was: asset erosion. The seven biggest Austrian sawing businesses had accumulated a loss of €137 million during that period. Hardly any investments were made, Austria's surplus logging capacity was officially claimed to be "more than 20%" - and instead of takeovers, there was only talk of shutdowns.

Situation has changed completely

Looking back at the past five years today, everything is completely different::

• The four biggest timber companies in Austria have massively bought themselves into business abroad. (In 2017, Binderholz took over Klenk Holz, Hasslacher incorporated Nordlam, Mayr-Melnhof Holz bought Hüttemann and Pfeifer Holz acquired Chanovice.)
• The biggest loss-maker (-€126 million) turned into the biggest profit earner (+€221 million): Mayr-Melnhof Holz.
• With Binderholz, Austria is now home to a new "Sales Croesus": €1 billion yielded in 2018 (+171% compared to 2013).
• The net equity base of those seven enterprises increased from 35% in 2013 to 47% last year. (In absolute figures, equity more than doubled from €451 million to €942 million.)
• Turnover increased from €1.8 bn. (2013) to €3.2 bn. last year.
• Material costs (essentially roundwood) amounted to €1.2 bn. in 2013, five years later the total was €1.7 bn.
  

All assessed enterprises continue to be family businesses. With the exception of Mary-Melnhof Holz, all of those companies are also owner-operated - this was already the case in the bright red years of 2007-2013.

Four fully integrated operations lead the way

The landscape also changed insofar as four timber companies have become sales kings by now. Binder (€1 bn), Pfeifer (€707 m), Mayr-Melnhof Holz (€684 m) and Hasslacher (€427 m).

The by far most dynamic timber enterprise in that period has been Binderholz: Their sales increased by 171%. Second place, which comes as no surprise, goes to Hasslacher Holding that generated 149% more turnover than in 2014. Both companies have long lists of acquisitions and investments.

On average, all seven companies had a sales increase of 72%. This makes those companies not only the biggest but also the most expansive enterprises of the whole sector. For comparison's sake: The entire Austrian wood industry yielded a turnover of €7.5 bn in 2013. In 2018, sales amounted to €8.33 bn - this is 11% more.

From restructuring to takeover

The most conservative enterprise during this period of observation was Mayr-Melnhof Holz. Its sales "only" gained 22% between 2013 and 2018 (compared to the average of 72% of all seven companies). In light of the point of departure in 2013, this comparatively slower pace of growth is not surprising to CEO Richard Stralz. In 2014, banks approved the expansion of the CLT production in Gaishorn as one of the first measures. The restructuring was only officially completed in 2016. The real bombshell came in 2018 with the takeover of Hüttemann Holz. And more bombshells could follow: The company already announced a second CLT production site in Paskov or Leoben.

After the crisis years, the owners of several enterprises complained: "We have learned to generate better results with significantly less sales." As it turned out, there were not just empty words. The result of ordinary activities of the "Great Seven" totaled €11 million in 2013 - in 2018, it amounted to €330 million - a thirtyfold increase (note: EBT in the case of Mayr-Melnhof Holz).

Margin success is relative, others perform better

Why was it that Austrian sawmills and further processors displayed such a successful performance between 2014 and 2018? "An EBITDA margin of 17% is actually not that good. The large state forest companies have similar cash flows, the paper and panel industries continuously register even better figures," Reinhard Binder, owner and managing director of Binderholz, puts the figures of 2018 into perspective (see article "Top year 2018").

Chance ...

In four of the five examined years, roundwood supply was suitable. And in at least three years of those, the actual roundwood price matched the level that sawmills themselves deemed appropriate (average spure/fir price southern Germany, Austria: 2014: €98/sm³, 2015: €92/sm³, 2016: €90/sm³, 2017: €92/sm³, 2018: €87/sm³, 2019 so far €77/sm³).

In parallel, opportunities opened up all over the world, and sales boomed. For the first time ever, demand increased on two gigantic overseas markets at the same time: USA and especially China. On top of the good results, the traditional markets (MENA region) were complemented by new sawn timber destinations: Pakistan, South Korea, Australia, India. Markets that in the past were virtually impossible to serve suddenly started buying. This acceleration in demand gave rise to increasing sawn timber prices. The average price in 2018 of softwood lumber assortments that are surveyed by Timber-Online was 25% above the level of 2008.

... and brains

Sawmills neither have direct influence on the selling conditions on global markets nor on roundwood supply. However, what is indeed in their power is the strategic development towards fully integrated plants. For this purpose, an extract from Binderholz's balance: "The internal further processing of the Binder group furthermore effectuated (in 2018) that the capacities of production units could be utilized throughout the entire year. The price level developed according to demand."

Furthermore, the for biggest timber enterprises are fully active in the cross-laminated timber business. Additionally considering Holzindustrie Offner and its subsidiary KLH, the top 5 benefitted from the growth in CLT demand between 2014 and 2018. The assessment by the Timber Online editorial department sees a demand increase of at least 60% during these five years.

Another fully integrated company

For comparability's sake, the analysis (2007-2013) of timber enterprise Johann Offner Holzindustrie again was evaluated without KLH. Together, the two company parts generated a turnover of about €171 million in 2018. The joint earnings before taxes amount to €14.6 million.