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JSC “Latvia's State Forests” Worked with a Profit of EUR 106.4 million in the First Half of the Year

The supervisory board of JSC “Latvia's State Forests” (LVM) has reviewed the company’s six-month operation results. The company earned EUR 287.4 million in revenue in the first six months of 2024, which is EUR 38.7 million less as compared to the corresponding period last year. In turn, profit before corporate income tax amounts to EUR 106.4 million, which is EUR 54.7 million or 34 % less than in the corresponding period of 2023.

Zane Driņke, Chairperson of the Supervisory Board of JSC “Latvia's State Forests”: “Although there is a decrease in the prices of wood products in Latvia's export markets, which also affects the prices of round wood in Latvia, the company has achieved excellent financial indicators in the first half of the year, through increasing the efficiency of its operations. Significantly exceeding the planned volumes of forest restoration and young stand tending works, it has been possible to provide a continuous increase in the productivity and value of forests owned by the Latvian state”.

EUR 257.5 million were earned from the sale of round wood assortments, which is EUR 41.2 million less than in the first half of 2023. This was mainly influenced by the 22 % lower average selling price of assortments. In the first half of 2024, a total of 3.65 million cubic metres of round wood assortments were sold, exceeding the sales volume of the first half of 2023 by 0.36 million cubic metres.

As compared to the corresponding period of the previous year, the revenue from the sale of wood chips is EUR 5.0 million less, which was mainly influenced by a 45 % lower average selling price. In the first half of the year, 317.5 thousand megawatt-hours of wood chips were delivered to customers at an average price of 22.17 EUR/MWh.

Cautious optimism in future forecasts

Due to the high interest rates in the Eurozone, the construction industry is stuck in stagnation. The indicators of operational activity remain very weak in housing construction. As compared to the end of last year, the future perspective of the development of construction in the United Kingdom, which is an important market for Latvian building structures, has improved.

Interest rates remain high, so it is predicted that construction activity in the most important export regions of Latvian wood production will remain at the current level in the second half of this year, therefore no significant improvement in the situation and an increase in demand are expected. Geopolitical and climatic risks also remain high, which may affect the operation of the wood supply chain and disrupt the existing balance of supply and demand.

Revenues from the extraction of mineral materials increase

As the company manages more than 180 mining sites of mineral materials throughout the territory of Latvia, EUR 1.6 million were earned from the sale of mineral materials and their aggregates to external customers in the first half of 2024. A total of 519.2 thousand cubic metres of mineral materials and their aggregates were sold, which is 223.6 thousand cubic metres or 76 % more than in the corresponding period of 2023.

The demand for forest seedlings is variable

In the first half of this year, EUR 5.7 million of revenue was obtained from the sale of forest tree seeds and seedlings to external buyers, EUR 0.1 million behind the revenues of the first half of 2023, which was mainly affected by the smaller amount of seedlings sold to this customer segment. In total, 46.7 million forest tree seedlings were sold in the first half of this year, including 19.0 million to external customers, of which 5.7 million seedlings were exported.

Environmental protection – an integral part of forestry

Environmental protection is an integral part of forest management; therefore, one of the company's tasks is to take care not only of the economic value of the territories under LVM's control, but also of the well-being and future existence of the species and ecosystems living in them.

25.2 % of the territories managed by the company are managed by LVM with the main goal of environmental protection. In 2024, it is planned to survey the territories of economic activities and monitoring sites in an area of ​​15.1 thousand hectares, recording new deposits of species in the national forest areas and monitoring those discovered so far.

In addition to daily environmental protection work, LVM continues to participate in two externally co-financed environmental projects, the implementation of which began in 2021: “Implementation of Latvian river basin management plans to achieve good surface water status” (LIFE GoodWater IP) and “Optimization of management of Natura 2000 protected areas” (LIFE-IP LatViaNature). In both projects, work is proceeding according to the plan. In June 2024, an open tender “Management of habitats and biotopes of protected species of European Union importance in 2024 and 2025” was announced. The objective of the tender is to carry out the forestry works necessary for the implementation of the LIFE-IP LatViaNature project in three pilot forest territories (where various habitats of European Union importance are being restored), as well as to carry out the planned eradication of the invasive beach rose Rosa rugosa.