A tough market environment in the United States has prompted wood processor Tenon to signal a weak six months ahead.The company has posted an annual ebitda of $US12 million, up 20% on the previous year to June.However, much of the result followed an incre
A tough market environment in the United States has prompted wood processor Tenon to signal a weak six months ahead.
The company has posted an annual ebitda of $US12 million, up 20% on the previous year to June.
However, much of the result followed an increase in short-term sales activity after a massive earthquake in Chile.
Tenon reported that Chile is the world’s largest supplier of finger-joint pine and MDF moulding production, much of which was shut down for a period following the magnitude 8.8 earthquake in February.
This led to a short-term boost in demand over supply and consequently increases to pre-orders from Tenon increased from customers ensuring security of supply.
Tenon reported the United States industry conditions were a mix of “head and tail winds” throughout the year.
While home affordability increased, this was offset by rising unemployment levels, large numbers of home foreclosures and reduced consumer access to finance.
“The net result was a continuation of a low level of consumer confidence, which in turn moderated Tenon’s fundamental earnings driver – real dollar spending on home improvements,” the company reported.
However, Tenon said it outperformed its competitors in 2010 with revenue rising 2% to $US329 million.
Despite predicting a subject half year ahead, Tenon remained positive about long-term market recovery in the United States housing sector.
“While forecasting experts and industry participants each have different views as to the exact timing, they do all agree that as the US economy enters its recovery phase and the unemployment situation eases, then the home improvement markets will also begin to grow again.”
Meanwhile, Tenon is looking at further opportunities in the US, particularly in the western half of the country where it has no full service marketing and distribution.
Australia was also a focus especially with news that major US-based retail home centres were exploring the market.
“We have initiated and completed extensive market research in Australian in the past 12 months and we do see opportunity to develop the market and to support retail customers there.”
Tenon said it was also probing Asian markets for sales opportunities.
“We also made the decision to increase our focus on low-cost country souring activity and we are now actively building the competency and teach of our team.”
