Czech Forestry Reports 19% Decline in First Half Profit

A state-run organization, Lesy České republiky (LČR), reported a 19% decline in gross profit to 3.85 billion CZK in the first half of the year compared to 4.73 billion CZK in the same period last year. This decline was due to a 21% decrease in timber harvesting to 3.8 million cubic meters, related to the subsiding bark beetle calamity. Lesy ČR manages almost half of the forests in the Czech Republic.

On Tuesday, the spokesperson for Lesy ČR, Eva Jouklová, said, “Lesy ČR is gradually returning to management that is not affected by the calamity. The smaller volume of timber harvesting documents this, lowering revenues and economic results.” The company’s revenues fell by 13% year-on-year to 8.22 billion CZK by the end of June.

The operational profit of the company, related to the cubic meter of harvested wood, was higher by 28 CZK in the first half of the year than in the previous year. “This is primarily due to cost savings in forest protection and effective management of the bark beetle calamity,” said the spokesperson.

The state-run organization expects a quarter-on-quarter decline in gross profit to approximately 4.9 billion CZK from last year’s 6.7 billion CZK due to lower timber harvesting and the anticipated decline in wood prices. The timber harvesting in state forests should drop to 8.5 million cubic meters this year to the values before the outbreak of the bark beetle calamity in 2018.

“Two million cubic meters of this should consist of bark beetle wood. This really means a return to normal management,” said the company’s general director, Dalibor Šafařík, in May. The company plans to increase its investment expenses from last year’s 1.3 billion CZK to 2.5 billion CZK this year. During the liquidation of the bark beetle calamity in 2020 and 2021, the company reduced its investment to 740 and 590 million CZK, respectively.

Most investments should go mainly into restoring damaged forest roads in areas most affected by calamitous harvesting. To this end, the company plans to increase repair expenses by 60% to 1.1 billion CZK this year. In November last year, the company sent an extraordinary contribution of 3.81 billion CZK to the account of the state in the Czech National Bank from its profits. This year, it sent the form three billion CZK from last year’s profit.

The forestry industry in the Czech Republic was significantly affected by the bark beetle calamity associated with falling timber prices between 2018 and 2020. In 2019, the company suffered a loss of 790 million CZK. In 2020, it only maintained a slight profit of 44 million CZK thanks to the acceptance of state compensation for falling timber prices due to the calamity of 2.3 billion CZK.

Despite the decline in profit, Lesy ČR is gradually returning to regular management. The company’s investment expenses and plans to restore damaged forest roads will contribute to its recovery.