Business

Coillte profits halve to €61m as timber prices fall

Headwinds hit State forestry company results

Coillte chief executive Imelda Hurley: falling demand hit timber prices last year. Photograph: Fennell Photography

Barry O'Halloran
Thu Apr 25 2024 - 14:32

Falling timber prices halved profits at State forestry company Coillte to €61 million last year, new figures show.

Coillte said revenue slipped to €414 million in 2023 from a record €479 million in 2022 as inflation and rising interest rates hit demand for timber, lowering prices for its key products.

Operating profits fell to €61 million in 2023 from €119 million the previous year, according to its annual report, published on Thursday.

Imelda Hurley, chief executive, said Coillte’s financial performance was solid in the face of significant headwinds.

READ MORE

“Timber prices fell 20 to 25 per cent over the course of the year,” she pointed out, adding that they were 40 per cent off highs reached two years ago.

She blamed inflation and rising interest rates for denting consumer confidence, but noted that prices should stabilise as those pressures ease.

Coillte’s statement said its financial performance had declined from recent records but the results were still its fourth highest in 35 years.

Ms Hurley pointed out that the industry’s fundamentals remained strong. The company’s statement noted that despite near-term uncertainties, it expected demand to stabilise.

Logs from Coillte’s forests go to sawmills that produce timber for building and other uses. The group also owns the Medite Smartply plants in counties Tipperary and Waterford which make boards used mainly in construction.

Coillte last year advanced €18 million in shareholder loans to Futurenergy Ireland, its joint venture with fellow State company ESB.

The business plans to build wind farms on the forestry group’s land with the potential to generate 1,000 megawatts of electricity.

Its first wind farm, Lenalea in Co Donegal, a partnership with SSE Renewables, has begun supplying electricity. A second has received planning permission while a further 10 are in various stages of that process, according to Ms Hurley.

The company paid €17.7 million in dividends to the exchequer last year, including a final dividend of €7.7 million for 2022 and €10 million in respect of last year.

It had €150 million available debt facilities at the end of last year following a refinancing, and net cash of €65 million.

A statement said this put it on a “strong financial footing entering 2024″, allowing it to continue its ongoing reinvestment programme.

Coillte is part of a Government interdepartmental and industry steering group on timber in construction, chaired by Prof J Owen Lewis, that is looking at ways of increasing the use of wood in building.

The company also aims to manage 30 per cent of its 440,000 hectares for nature and biodiversity by 2025. Currently about 90,000, a fifth, is earmarked for this.

Ms Hurley said Coillte has already identified more than 7,600 hectares “that will move into that category”.

Vivienne Jupp, Coillte chairwoman, said financial sustainability was needed to allow the company to deliver the benefits of the Republic’s State forests for “climate, nature, wood and people”.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas

LATEST STORIES