Rayonier is not the highest-profile business in Jacksonville in the US but its corporate fingers spread far and wide. Source: The Florida Times Union, Equities.com
Organized as a real estate investment trust, it’s the seventh-largest landowner in the United States, the third largest in New Zealand. And the holdings keep growing.
Last month, it bought another 62,600 acres in East Texas. Most of its 2.7 million acres is timberland, growing trees that may end up in Southern sawmills or shipped to China.
Some of that land may have more valuable uses than just those trees. Paul Boynton, who took over as president and chief executive officer a year ago, points out that the company owns 200,000 acres east of Interstate 95 between Savannah and Daytona Beach.
The company has its own sawmills and wood chipping plants. But the biggest chunk of Rayonier’s $1.5 billion annual revenue comes from what are called performance fibers. That’s cellulose from trees broken down so finely and so specifically that it’s a natural plastic or a food additive.
They’re used in everything from coatings on television screens abd casings for hot dogs. The fibers also are in shampoos, syrups and toothpaste.
Steven Chercover, a stock analyst who covers the forestry industry for D.A. Davidson, had nothing but good things to say about Rayonier.
“They’re a timber REIT [real estate investment trust] and at first blush, their business is selling trees for building materials,” he said. “With real estate recovering, cash flow should improve. But their specialty cellulose produces an unbelievable cash flow. “That’s why it’s the best-performing timber REIT out there.”
With 35% of the world’s performance-fiber production, Rayonier is the No. 1 supplier. So it’s spending $300 million to rework its plant. The line that has turned trees into absorbent fluff for disposal diapers and other products is being converted to another performance-fiber line.
The numbers are simple: A ton of performance fiber brings close to US$2000, Boynton said. Fluff brings half that. And the company has sold all of its performance fibers for the past five years, he said.
It takes 6 tons of green trees to produce one ton of fibers. Half of that green weight is water; the rest of the waste is burned to fuel the plants.
The company also took in US $122 million in 2011 from what it calls “log trading.”
“We’re an intermediary,” Boynton said. “We’ll help with loading and shipping other companies’ logs, because we’re already there. Then we take a cut.”
