Unexpectedly high cost increases in Gabon have forced Precious Woods to take drastic measures to reduce costs in order to secure the basis for the economic security of its operations in the short and medium term. In Gabon, the Company has recorded considerable cost increases since last year. In 2021, export taxes increased unexpectedly and the income tax reduction ended. From mid-2022, fuel prices increased by almost 100%.
The current situation in sales markets leaves little room for further price increases. Therefore, due to the increase in fuel prices, several wood species can no longer be processed profitably. Precious Woods can still harvest these species sustainably and sell the logs on the local market, however, the Company will no longer process these species into sawn timber in its sawmills. Precious Woods will close an older sawmill, reduce associated support services and decrease workforce. Most of the staff reduction can be achieved through natural fluctuation including the temporary employees.
The measures taken have no impact on its two sawmills for Okoumé and Azobé products. For these species, Precious Woods has initiated an innovation process to develop products with higher added value and to strengthen CEB's position as a leading supplier of certified quality wood applications. This process is being carried out in close cooperation with partners and customers to ensure future sales. Internal projects to reduce dependence on fossil fuels have also been accelerated. The goal remains to replace a significant portion of its fuel consumption with renewable energy production at the Bambidie site.
The operations at Precious Woods Amazon are also affected by cost increases and currency effects. However, profitability can be ensured for the time being without drastic measures.
Precious Woods is an international company active in the sustainable management and use of tropical forests. The company’s core activities include sustainable management of tropical forests, timber processing and the trading of FSC-certified timber products.
