Truck Loggers Magazine, July 14, 2016
By Aaron Sinclair
At the 73rd Convention and Trade Show in January, I was honoured to be invited to speak on the sustainability of logging contractors. One part of the presentation featured the Figure 1 Graph showing the profitability trend of logging contractors and publicly traded licensees operating in British Columbia.
How Our Analysis Works
Our company has been fortunate to work with some great logging contractors over the last few years who have trusted us with their confidential information, including their financial statements, They know how much confidentiality means to us and that we take their trust seriously.
The contractors that shared their financial statements with us represent both Interior and Coastal contractors, The Interior sample represents an annual harvest capacity of approximately 23 per cent of the Interior harvest. The coastal sample represents an annual harvest capacity of approximately 14 per cent of the coastal harvest.
We analyzed the financial statements collected and adjusted them to remove non-operating income and expenses and normalized tax planning measures. We also adjusted management compensation to a consistent amount to recognize differences in compensation that could influence the performance. Then we calculated the median adjusted operating profit margin in each fiscal year and calculated the logarithmic trendline to smooth the variation from year-to year. This is how we arrived at the Interior and Coastal profitability trendlines in the graph above. The same process was followed using the available financial statements from publicly traded licensees to establish the profit margin trend of licensees.
See what our analysis found & read the entire article here.