ArborGen 2021 report and outlook

Friday 4 Jun 2021

ArborGen Holdings Limited has announced an after-tax profit of US$3.2 million for the year ended 31 March 2021 and is projecting rising availability and sales of its genetically-enhanced seedlings to the plantation forestry sector.

Excellent progress was made on ArborGen’s core strategy to grow supply and sale of its proprietary advanced genetic products (MCP seedlings) in its largest market, the US, where it is an industry leader. Turning to the immediate outlook, Chairman David Knott said strong tailwinds were positioning the business well for FY22.

With 50% of adults in the US now fully Covid-vaccinated, and the expectation is that 75% to 85% will be vaccinated by August of this year. Regulations around H2-B non-immigrant labour visas have eased, and strong underlying demand for wood, especially softwood, is driving an expansion of sawmill capacity, which will in turn support strong demand for softwood seedlings this financial year and beyond.

In New Zealand, demand is being driven by replanting of the “wall of wood” forests established in the late 1980s to mid-1990s and new forest establishment to meet government climate change commitments.

In Brazil, ArborGen’s orders to date are nearly 70% higher than at this time last year. The company is projecting increasing sales in Brazil based on increasing softwood exports, recently-announced pulp mills, strong demand for eucalyptus pulp and charcoal products, expansion of ArborGen’s sales and marketing teams, and rising recognition of the value of its proprietary products.

ArborGen also continues to progress a range of initiatives to minimise the effects of adverse weather events. These include building an inventory of reserve seed, reducing supply risk through geographically dispersed orchards and nurseries, a diversified age profile for orchard trees, and nursery procedures protecting vulnerable younger seedlings.

Source: ArborGen

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