Premier Forest Group was two months into its 26th year of business. Co-founder Terry Edgell – between announcing another year of record financials, considering the new five-year plan and discussing a parcel of possible acquisitions – almost sighed when he admitted they really should mark their own silver anniversary. It remains on the office planner.
“We were just three guys who wanted to start our own timber importing and distributing business,” he said.
“Twenty-five years down the road I think barriers to entry into the trade are higher now and would make it harder to achieve; the capital cost and manpower required for what was a small business at the time to deal with; the level of red tape and regulation now, including, timber certification, EUTR, waste regulations, H&S, HR and access to cash to name but a few issues.”
What started in 1993 trading timber from an industrial estate in Abercarn, Gwent, is now a group of companies based in Newport principally engaged in the importation, distribution, merchanting, sawmilling and wholesale processing of timber and timber products.
It was begun by three ambitious 26-yearolds. Nigel Williams, Terry Edgell and Dilwyn Howells had all worked for Meyer and met while based at the company’s Newport site. The business remains independent.
“When we first formed we were just happy we were earning more money than we were before. We put in £20,000 each and set out to be a major disruptor. Twenty-five years down the line I am proud of what we went on to achieve,” Mr Edgell said.
Premier Forest Group now operates across 14 locations in the UK and Ireland. It includes Premier Forest Products, Premier Forest Processing and Clarks Wood in Newport; Premier Forest Sawmilling and Mill Timber Direct in Crumlin in South Wales; Duchy Timber in Lostwithiel in Cornwall; Premier Goldberg in Langley; Premier Doncaster; Premier Birmingham sales office; Dublin Plywood and Veneers and seven sites for the Brooks Group in Ireland. It employs 350 people.
The company serves just about every industry sector that involves timber from cars, caravans, coffins, construction, furniture, film production, pallets, portable buildings and shopfitting.
Premier has just posted another successive year of record growth.
For the year to April sales grew by £10m to a turnover of £126m, with pre-tax profits more than doubled to more than £9m. It is on course to achieve a targeted £200m turnover within the next three to four years. Mr Edgell says the company has doubled gross margins in the last six years and should easily reach a projected £135m turnover this year.
The business is still a closely held company with the three founding directors remaining the principal shareholders.
Following the latest financial report, the management structure has been reshaped and Mr Edgell has taken on the role of group CEO. This follows the appointment last year of Steve Gillson as UK sales director, joining from one of the UK’s largest builders’ merchant groups, and James Pickford, formerly UK purchasing manager at Premier Forest Products, as group UK purchasing director.
Non-executive chairman John Antoniazzi said Mr Edgell had been instrumental in the company’s growth and development, and it was appropriate that as the group embarked on its next phase of growth that the board recognised his “increasing leadership role and ability to drive the company’s strategic ambitions”.
Mr Edgell is modest. “My appointment as CEO comes down to governance. Premier is now a large company and if we are to achieve growth then we have to keep an eye on the detail and we have brought in the expertise to drive this,” he said.
The year has seen significant growth including two site relocations. Clarks Wood in Bristol moved to South Wales to pool resources with parent company Premier Forest Products in Newport Docks, while Premier Goldberg moved to a new 53,000ft3 site in Langley near Heathrow, to take advantage of opportunities in the south-east.
Premier has achieved significant organic growth from its range of timber and timber products, and also by acquisition. The company said it plans more acquisitions and continued capital investment in all divisions.
For Premier, acquisitions began as both a method of increasing turnover, but also to de-risk and offer a broader product choice. In its first year 85% of business was sheet materials and 15% softwood.
Now it is 40% sheet material, 20% softwood, 5% hardwood, and 28% in associated products such as fencing panels and materials, laminates, insulation materials, flooring and biomass products. Some 14% of group sales and added value products are now generated by its own sawmills and production facilities.
The policy to diversify evolved more as a way to combat the effects of the recession and led to a remodelling of the business in 2012.
“Premier Forest Products was a pile-it-high sheet material trader and the recession taught us that was not a good space to occupy.
“Only if you are adding value and making something, or being specialist, can you have an advantage. We needed to spread the risks and enter other market areas. We brought in hardwood and took our products to end users and we entered sawmilling,” Mr Edgell said.
It is unusual for a trader to be directly involved in sawmilling, but the move was indicative of its strategies. It now has three sawmills in South Wales, Cornwall and Doncaster, which convert a variety of home-grown logs into sawn timber for pallets, fencing, garden landscaping, DIY and agricultural products. There are also kilns and pressure treatment facilities.
“The first sawmill was quite an opportunistic purchase. A broker came up to us and said there was a sawmill for sale just 25 minutes up the road and asked us if we were interested.
“We felt we could maximise the value of what it produced better than it had been and we would no longer be just an importer. Also there was a shortage of home-grown timber at the time so it would secure our supply. It was quite an important change for us.”
Mr Edgell describes the purchase of the second sawmill in Cornwall as a no-brainer because it took Premier into the south west. Acquisitions in Ireland have provided similar diversification. About half of the company’s business stems from Ireland and most of that is merchanting, while in the UK business is importing, distribution, sawmilling and manufacturing.
This also gives the company some room to manoeuvre around Brexit, but Mr Edgell says the unknown is daunting.
“We are putting together our next five year plan, but we might as well put it back on the shelf because no-one knows what will happen. We are equally in Ireland and the UK so we are half in Europe and half outside. We hope that will be complementary.”
Unlike other businesses, Brexit has not caused Premier to draw in its horns. It hopes to complete an acquisition before summer’s end and two more before the end of the year. Mr Edgell said these were also about strengthening the product mix and geographical coverage.
“There are few venture capital acquisitions in the timber industry. The average timber company is a legacy business and the people want to hand it over in the knowledge it will be looked after, which we do. We have a strong balance sheet and a war chest, and we have proved to the banks that when we make an acquisition we do what we set out to do, so we are able to raise money and move quickly, which is very important.”
Premier is optimistic about reaching the £200m turnover target and due to its strong financial position is sure it can go further.
“We have been quite conservative in the way we see growth. I think there was only one year in which we did not grow. We have concentrated on building a solid balance sheet. We are in the best shape we have ever been and that fuels further growth.
“If we do not take the opportunity for further growth then I think we have let ourselves down.”
