Profits from the Czech Republic’s forests increased to 7.4 billion

The state enterprise Lesy České Republiky (Forests of the Czech Republic) has multiplied its gross profit to a record CZK 7.39 billion in the first three quarters of the year from CZK 2.9 billion last year.

The main reason for the profit growth was the increase in timber prices. Forestry ČR’s revenues rose 34 percent to CZK 14.5 billion from CZK 10.8 billion a year ago, company spokeswoman Eva Jouklová said. Lesy ČR manages almost half of the forests in the Czech Republic.

The enterprise posted its highest-ever interim gross profit for the first three quarters of the year in 2015, at CZK 5.46 billion. The enterprise had the highest gross profit for the whole year in 2014 at CZK 7.96 billion, when the interim gross profit to the end of September was CZK 5.23 billion.

“The higher profit is related to higher timber monetization. Sales increased mainly due to higher market prices for all raw timber grades in response to this year’s geopolitical situation translating into inflationary pressures,” the spokeswoman said.

The company’s higher revenues are also due to increased timber sales to small and medium-sized regional processors. “Partial cost savings in forest regeneration related to a higher share of natural regeneration are also reflected in the economic result,” the spokeswoman said.

Despite logging output falling by a fifth year over year to 7.4 million cubic meters, the company’s sales increased significantly in the year to September. The lower harvests are due to the waning bark beetle calamity and the company’s gradual return to routine management according to forest management plans. For 2021, timber harvesting in state forests fell by a fifth to 11.4 million cubic meters and is expected to fall to 9.5 million cubic meters this year.

The company intends to use the profits mainly for forest restoration after the bark beetle calamity and to create reserves for planting work, forest road restoration, and property repairs. The company estimates that forest restoration and road repairs after the accident will require tens of billions of crowns in the coming years.

Last year, Lesy ČR increased its net profit to CZK 2.74 billion from CZK 44 million in 2020. The main reason for the profit growth last year was increased timber prices. The company also received subsidies from the state for restoring forests destroyed by bark beetles. The amount of the previous year’s profit almost returned to the level of the year before the bark beetle calamity. Then, in 2017, it made a net profit of CZK 3.08 billion.

Between 2018 and 2020, the profitability of the Forest Enterprise was fundamentally affected by the bark beetle calamity associated with the fall in timber prices. In 2019, the company suffered a loss of CZK 790 million, and in 2020 it maintained a slight profit of CZK 44 million only thanks to the receipt of state compensation for the reduction in timber prices due to the calamity of CZK 2.3 billion.