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TFS Corporation Provides Trading Update for 9 Months Ended 31 March

TFS Corporation Provides Trading Update for 9 Months Ended 31 March
"The 2016 harvest is expected to deliver more than 300 tonnes of heartwood, a tenfold increase on last year." - Frank WIlson, Managing Director
Jun 01, 2016 By Simon Herrmann Tags: TFC

The world’s largest owner of Indian sandalwood plantations TFS Corporation (ASX:TFC) provided a trading update to the market for the nine months ended 31 March 2016. Cash earnings rose 16% while revenue climbed 10%.

TFS’ Cash Earnings up 16% while NPAT Declined

Cash EBITDA for the period was $12.1 million compared to $10.4 million in the same period last year. The rise in earnings is due to higher sales to institutional investors. Total revenues were $162 million which is inclusive of cash revenues totalling $83 million. Non-cash revenues as well as net profit after tax – which are a result of plantation revaluations – were lower during the period due to unfavourable foreign exchange movements. Net profit after tax was $66.2million which compares to $81.3million last year.

Frank Wilson Pleased With Financial Performance

TFS’s Managing Director Frank Wilson says TFS is on track to achieve the guidance: “We expect to generate significant operating cash inflows in the final quarter as we finalise the majority of our FY16 plantation sales.”

He furthermore highlighted that the company’s financial performance will transform due to the increase in harvest: “The 2016 harvest is expected to deliver more than 300 tonnes of heartwood, a tenfold increase on last year. The sale of this harvest to our broad customer base across Asia, as well as in Europe and the US, will generate attractive and consistent operating cash margins which will transform our financial performance.”

Management targets EBITDA Growth of 5%-10%

TFS is on track to make the first delivery of value-added wood to China under a recently established long-term supply agreement. Taking into account the financial performance of the past 9 months as well as considering the sales pipeline for the upcoming quarter, management believes that TFS is on track to deliver FY16 cash EBITDA growth of 5%-10%.

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Simon Herrmann Author: Simon Herrmann Jun 01, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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