14 INTEGRATED ANNUAL REPORT 2025 We must go back ten years to 2015 to find the last time when NCT recorded revenue below R2 billion. That gives some indication just how challenging it was in the year under review. For more than a third of the year, NCT had neither Richards Bay nor Durban mills available to export chips on behalf of members. All these challenges meant that we as an organisation processed only around 1.3 million tonnes of timber through export and local markets. This is well below what we believe to be the sweet spot for our organisation of two million tonnes. Other than having this period during which NCT was constrained in taking members’ timber, members also had to deal with a price reduction for both Eucalyptus and Acacia, which was difficult in the face of rising forestry and transport costs. While NCT was focused on rebuilding the mills and looking for ways to mitigate the fallout for members, the export markets themselves posed additional challenges to our industry. The global woodchip market was, and still is, under pressure. China, the biggest global woodchip buyer, has a large influence on this market, and its pulp market showed no signs of recovery during the period. During the period, the pulp hardwood General Manager’s Report DANNY KNOESEN pricing declined by 23%. With the Japanese pulp and paper market in a structural decline, these conditions unfortunately resulted in a further weakening in the dollar prices of woodchips. NCT had to contend with a double-digit decline in dollar prices for South African woodchips. At the same time, the rand strengthened — frequently falling below R18 to the dollar — in response to the new Government of National Unity. These conditions placed significant pressure on NCT as we navigated multiple simultaneous challenges. With these parameters working against exporters such as NCT, it was thus inevitable that we had to reduce the Mill Delivered Prices. Again, it is important to understand that this adjustment was market-related and not leveraged to fund the fire rebuild. As we move into our new financial year the dollar pricing pressure continues, and the industry took a second year of dollar decreases in a row for our products. The outlook remains challenging, although we are buoyed by our anchor customers returning to full contract volumes this year, and affirmation that this will continue for the foreseeable future. Reductions in imports by our customers are being channelled to other suppliers as NCT remains a preferred trading partner.
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