RusForest provides update on Russian pellet mill in Q2 results

Sweden-based RusForest AB has released financial results for the first half of the year, reporting the company produced 19,320 metric tons of pellets during the first six months of 2014, including 12,830 metric tons during the second quarter. The company sold 16,259 metric tons of pellets during the first half of the year, including 16,251 metric tons during the second quarter.

According to RusForest, pellet output in the second quarter was less than planned. During the three-month period, the company said its recently completed pellet mill in Russia performed equipment adjustments and was working on training the operators. By the end of the quarter, daily pellet production reached 200 metric tons.

The company reported revenue $17.8 million during the second quarter of the year, up from $15.2 million during the same period of last year. Adjusted EBITDA was $200,000, compared to -$3.5 million during the second quarter of 2013. RusForest reported a $3.8 million loss for the quarter, compared to an $11.8 million loss during the same quarter of the previous year.

For the first six months of the year, RusForest reported revenue of $34.7 million, up from $33.7 million the previous year. Adjusted EBITDA was $1.3 million, compared to -$5.8 million during the first half of last year. The company reported a loss of $7.1 million for the first six months of the year, compared to a $17 million profit during the same period of 2013.

Within its quarterly report, RusForest indicated it signed a contract for the sale of 60,000 metric tons of pellets on June 23. That volume represents the majority of the company’s annual production capacity. “The pellets are being sold through one of the leading trading houses focused on bioenergy and are expected to be used as fuel in various European coal-fired power plants,” wrote Matti Lehtipuu, CEO of RusForest, in a statement to shareholders.  

According to Lehtipuu, pellet sales during the second quarter were the key contributor to improved EBIDA in Arkhangelsk. This confirms the rationale behind our investment decision to build the pellet mill in Arkhangelsk, Russia, last year, he continued.

On July 28, the company announced the sale of its subsidiary Ystad Pellets AB, which owns a non-core wood pellet mill in Ystad, Sweden, that has been idle for several years. RusForst reported that the net cash proceeds from the transaction amount to approximately $600,000.