In 2023, SIA “Rīgas meži” successfully delivered its budget and met the financial targets set by its owner, Riga City Council, securing the company's financial stability and sustainable development – according to the company's annual report approved at the shareholders' meeting on 15 April.
The shareholders gave a favourable assessment of the company's performance indicators, particularly noting the substantial body of work completed and the significant progress achieved both in securing the financial stability of SIA “Rīgas meži” and improving the sustainability of its business operations, and in developing research and innovation, stakeholder management, supply chain management processes and more.
The shareholders' meeting rated the performance and results achieved by SIA “Rīgas meži” in 2023 as “very good”.
“Although last year conditions in the market and the industry remained challenging, by managing processes successfully, making operating costs more efficient and introducing modern technological solutions, we have achieved solid financial results,” emphasises Anita Skudra, Chair of the company's Management Board. “The profit of SIA “Rīgas meži” from business operations (excluding changes in the fair value of biological assets) was 1.054 million euros last year. Particularly strong results were achieved in the area of investment. We have implemented significant measures to move closer to our climate neutrality goals and have continued to develop important research and development projects. But most importantly – a great deal has been done to look after our employees, improve the working environment and ensure access to the technology they need.”
In 2023, SIA “Rīgas meži” continued to develop its forestry, logging, seedling growing and property leasing business lines, and also successfully fulfilled the obligations set out in its agreements with the Riga municipality.
The shareholders' meeting supported the proposal by SIA “Rīgas meži” to pay 40% of last year's profit, or 0.421 million euros, into the municipal budget, and to invest the profit not distributed as dividends in the company's further development and the achievement of its strategic goals. As a reminder, last year SIA “Rīgas meži” paid dividends of 2.76 million euros into the municipal budget, which is 31% of all dividends paid by Riga's municipal companies.
Key financial indicators and investments
Last year SIA “Rīgas meži" was able not only to maintain but also to increase its net turnover, reaching 21.95 million euros, which is 0.6 million euros, or 2.8%, more than in 2022.
In 2023 the company's profit from business operations was 1.054 million euros, while net profit margin was 4.8%. The current ratio of SIA “Rīgas meži” was 2.5, confirming the company's financial stability.
The most significant revenue last year came from the sale of timber – roundwood, sawn timber and their by-products – and from the provision of transport services. These accounted for 15.3 million euros, or 70% of total revenue.
So that SIA “Rīgas meži” can provide high-quality services, improve the efficiency of its processes and strengthen its sustainability, the volume of investment made in 2023 increased almost fivefold compared with 2022, reaching 4.6 million euros. This significantly exceeded the level of depreciation of fixed assets. The main areas of investment were: the purchase of utility machinery and vehicles for managing forests and parks, the reconstruction of road infrastructure, and improvements to the supply of tools. Work has also begun on installing renewable energy sources (solar panels) for own consumption.
Development, environmental protection and education
Sustainable innovation, a responsible attitude towards environmental values and employee well-being are among the most important principles of the strategic development of SIA “Rīgas meži”. Aware of the added value of commercial practice based on these principles, as well as of its own role in the value chain of Riga, Latvia and the world, the company works to reduce the negative impact of its activities on the environment and to enhance the positive.
A. Skudra emphasises: “The company's priority has been, is and will continue to be the effective management of environmental risks, which includes both actions that promote climate neutrality and the conservation of natural values, through environmentally friendly forest and park management practices, biodiversity monitoring, increasing ecosystem diversity and more.”
Importantly, in 2023 the forest stands owned and managed by the company sequestered 327,087 tonnes of CO₂, which is 1.8% more than in 2022. SIA “Rīgas meži” was the first company from Latvia to join the European initiative to plant three billion trees for the planet's future. The company has also created an opportunity for other organisations and companies to act in a socially responsible way by establishing new forest stands in places that are degraded or where no forest has grown for at least 20 years.
Last year SIA “Rīgas meži” took part for the second time in the national-level Sustainability Index assessment, where it was awarded the Gold category (previously Silver), as well as the “Sustainability Champion 2023” award for the fastest growth over the year. The company also took part for the first time in the Society Integration Foundation's programme for developing an inclusive society and a family-friendly organisational culture, gaining the status of “Family-Friendly Workplace”.
In 2023, “Rīgas meži” worked actively on developing recreational opportunities and infrastructure. In May, the environmental education centre and the “EkVidO” programme, or “ECOLOGY. ENVIRONMENT. AIR”, began work under a new brand, to a new standard and with the opening of the Crafts House, offering ten new education programmes and nature discovery activities. The company also continued to actively implement international cooperation projects.
SIA “Rīgas meži” operates in accordance with the principles of good corporate governance. For example, it is the first Riga municipal company to have drawn up and submitted for approval a Sustainable Development Strategy through to 2035. At the same time, the company has also updated its Medium-Term Strategy for 2019–2025, the aim of which is to move towards sustainable, knowledge-based land management and to diversify the use of resources and sources of revenue, including from non-timber sources.
Likewise, following the instructions of the State Audit Office and the Competition Council, as well as of its owner and supervisory board, SIA “Rīgas meži” continued in 2023 to exit the roundwood processing business. As a result, an agreement on the sale of the “Norupe” sawmill was signed in 2024. It is important to the company that employees' interests are respected in this process, that the entire business line is sold as a whole rather than split into separate assets, and that the transaction will not include guaranteed raw material supply contracts.
In conclusion
The 2023 financial statements of SIA “Rīgas meži” have been prepared, for the third year running, in accordance with the International Financial Reporting Standards as adopted by the European Union (EU), which ensures the transparency and international comparability of the company's performance indicators, including with comparable companies in EU countries.
The company's audited financial statements, including the management report, the independent auditors' report and the corporate governance report, are available at: https://ej.uz/gada_parskats2023