Coillte profits halved in 2020 as firm forced to borrow millions

Profits at Coillte, the commercial forestry semi-state, halved last year as the company was forced to borrow tens of millions of euros amid a crisis caused by licencing backlogs in the forestry sector.

It is understood that Cabinet will be told on Tuesday that borrowing at the company increased from zero to €28 million last year, with profits roughly halved from €60 million to less than €30 million.

While Ministers will be told that operating cashflow is still healthy, the company is facing fundamental challenges caused by the backlog.

All forestry activity, tree planting, felling and building roads to transport logs, requires a licence under the Republic's laws, which allow broad grounds for appeal. However, the Department of Agriculture, Food and the Marine's forestry division, which handles permit applications, and the committee that deals with any challenges, did not have the staff to cope with the volume of work last year.

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At one point in 2020 sawmills estimated that the forestry licensing delays had stalled the production of 1.1 million cubic metres of wood, enough timber to build 50,000 new homes.

Licensing delays

Imelda Hurley, chief executive of Coillte, which supplies three-quarters of sawmills' needs, recently acknowledged that the department was beginning to deal with the problem.

Construction timber costs are also rising following the shortage in supplies sparked by the licensing delays.

Figures issued earlier this month by multinational quantity surveyor Linesight show that timber prices are rising by 4 per cent to 5 per cent, making it one of several building materials whose costs are increasing ahead of construction inflation.

The Oireachtas passed a new law in the autumn streamlining the licensing and appeals process. The department has also begun hiring new staff to deal with the volume of applications and appeals.

Tackling the licence backlog is a one of four key aims of a new Government forestry industry strategy begun in February by Senator Pippa Hackett, Minister of State for Agriculture.