Calamity timber fells Lesy ČRs earnings

09-09-2016

State-owned forestry company Lesy ČR is facing a serious bark-beetle infestation which has affected this year’s production of timber, the daily Hospodářské noviny reported on Friday. The company announced this week that up to 70 percent of the all its timber production is so-called calamity timber. The damage to forests is also reflected in the price of unprocessed timber, which is at its lowest level for the past few years.

Photo: Štěpánka BudkováPhoto: Štěpánka Budková To date, Lesy ČR have felled 1.2 billion cubic metres of timber infested with bark beetle, which is four times more than last year.

“We are experiencing a dramatic increase of calamity timber, which needs to be felled. We could improve our sales by producing high-quality timber, but we are concerned about the sustainability and quality of the forests,” Lesy ČR general director Daniel Szórád told the daily. During the first seven months of the year, the state-owned company posted net income of three billion crowns, which is a drop of 1.3 billion compared to the same period last year. However, Mr Szórád told the paper that the company will meet its financial target and expects to reach a profit of 3.77 billion crowns for the full year.

In 2015, the company paid over eight billion crowns into the state coffers. This year the figure should be around 5.6 billion crowns.

The lower quality of timber has also affected prices. A cubic metre of spruce timber is currently sold for an average 1400 crowns, which is a year-on-year drop of 200 crowns. According to Szórád, Lesy ČR has to export timber because there are insufficient outlets for sales in the Czech Republic.

Between 15 million and 17 million cubic metres of timber is felled in the Czech Republic annually. Around one third of the unprocessed timber is directed towards foreign, mostly EU markets, in unprocessed form, which makes the Czech the biggest producer of unprocessed timber in the EU. The biggest purchasers are Germany and Austria.

Lesy ČR is currently working on a plan that would keep more timber on Czech soil, by increasing its production and consumption.

Consumption of timber in the Czech Republic is very low. For example in the US or Japan, it is 150% percent higher than in the Czech Republic and in the neighbouring countries, it is used five more times in the building industry.

The Ministry of Agriculture is currently also working on a programme that would support new investments into processing timber. The programme is scheduled to be presented within the next few weeks.

Lesy ČR owns about half of the forests in the Czech Republic. There are hundreds of other timber producers in the Czech Republic, including foreign companies such as Mayr-Melnhof Holz Paskov or Stora Enso Timber.

09-09-2016