Lesy CR Turns A Profit Thanks To State Aid

Lesy České republiky (LČR) ended last year with a profit of 44 million crowns after a loss of 790 million crowns the year before. Money from the state to compensate for the reduction in wood prices due to the bark beetle calamity in the amount of 2.3 billion crowns helped to end last year in the plus of the company. Initially, the company anticipated that it would suffer a loss of up to 1.9 billion due to the bark beetle calamity last year. 

Compensation for lower wood prices was also received from the state by other forest owners. The forests of the Czech Republic own almost half of the forests in the country and its priority is to manage the bark beetle calamity.

“The result was very positively affected by state funds compensating for the reduction in timber prices. But we immediately return the money to forests during the restoration. Our costs of growing activities last year reached almost 3.5 billion crowns and increased by 21 percent compared to 2019,” said Josef Soldier. According to him, the company also started to create a corporate reserve fund again in accordance with the company’s development strategy from December 2020. “This is a crucial source in sudden events and calamities,” said Vojáček.

Last year, the company planted 74 million seedlings and afforested 16,000 hectares, of which 3,790 hectares naturally. This year, it plans to afforest 21,000 hectares of clearings and plant a record 85 million seedlings. Due to the massive logging of bark wood, the area of clearings in state forests increased by six percent to 32,544 hectares at the end of last year.

The company increased its timber production by 2.9 percent last year to a record 14.3 million cubic meters. The sharp increase in 2019 did not continue, when mining increased by 30 percent year-on-year to 13.9 million cubic meters due to the massive spread of bark beetles. Barkwood logging fell 1.5 percent to 9.56 million cubic meters last year.

Last year, the company’s revenues increased by 22 percent to 8.77 billion crowns. The company sells more and more wood on its own and leaves less and less for trading to forestry companies, which provide it with logging and reforestation. Last year, the company itself traded 4.6 million cubic meters of wood, ie about a third of the total production.

This year, LČR plans to slightly reduce mining to 14.07 million cubic meters. Logging in state forests began to grow significantly with the advent of the bark beetle calamity in 2018. In the years without the bark beetle calamity, logging at Lesy ČR was around eight million cubic meters.

The bark beetle calamity associated with the fall in wood prices has been declining the company’s profits for the last three years. Between 2010 and 2017, the annual profits of Lesy ČR ranged in the order of billions of crowns, in 2017 the profit was 3.08 billion crowns.

The company employs about 3,500 people throughout the Czech Republic and is based in Hradec Králové.