The supervisory board of AS “Latvijas valsts meži” (LVM) has reviewed the company's operating results for the first half of this year. Compared with the corresponding period last year, in the first six months of 2024 the company generated revenue of 287.4 million euros, which is 38.7 million euros less. Profit before corporate income tax, meanwhile, amounts to 106.4 million euros, which is 54.7 million euros, or 34%, less than in the corresponding period in 2023.
Zane Driņķe, Chair of the supervisory board of AS “Latvijas valsts meži”, emphasises: “Although prices for wood products are falling in Latvia's export markets, which also affects roundwood prices in Latvia, the company has achieved excellent financial results in the first half of the year by increasing its operating efficiency. By significantly exceeding the planned volumes of forest regeneration and young stand tending work, we have succeeded in delivering a continuous increase in the productivity and value of the forests owned by the Latvian state.”
Revenue from sales of roundwood assortments amounted to 257.5 million euros, which is 41.2 million euros less than in the first half of 2023. This was mainly due to a 22% lower average selling price for assortments. In the first half of 2024, a total of 3.65 million cubic metres of roundwood assortments were sold, exceeding the sales volume of the first half of 2023 by 0.36 million cubic metres.
Compared with the corresponding period of the previous year, revenue from woodchip sales is 5.0 million euros lower, mainly as a result of a 45% lower average selling price. In the first half of the year, 317.5 thousand megawatt hours of woodchips were delivered to customers at an average price of 22.17 EUR/MWh.
Cautious optimism in forecasts for the future
In the eurozone, the construction sector is stuck in stagnation under the influence of high interest rates. Activity indicators remain markedly weak in housing construction. Compared with the end of last year, the outlook for construction has improved in the United Kingdom, which is an important market for sales of Latvian building structures.
Interest rates still remain high, and it is therefore expected that in Latvia's most important export regions for wood products, construction activity will remain at its current level in the second half of this year, without any significant improvement in the situation or increase in demand. Geopolitical and climate-related risks also persist, and these may affect the operation of the wood supply chain and disrupt the current balance of supply and demand.
Revenue from mineral material extraction is rising
With the company managing more than 180 mineral material extraction sites across Latvia, in the first half of 2024 revenue of 1.6 million euros was generated from the sale of mineral materials and mixtures thereof to external customers. In total, 519.2 thousand cubic metres of mineral materials and mixtures were sold, which is 223.6 thousand cubic metres, or 76%, more than in the corresponding period in 2023.
Demand for forest seedlings – variable
In the first half of this year, revenue of 5.7 million euros was generated from the sale of forest tree seeds and seedlings to external buyers, 0.1 million euros behind the revenue for the first half of 2023, mainly as a result of a smaller volume 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 inseparable part of forest management, with the company taking daily care not only of the economic value of the territories under its stewardship, but also of the well-being and continued future existence of the species and ecosystems living there.
In 25.2% of the territories it manages, LVM's principal objective is environmental protection. In 2024, it is planned to survey a total of 15.1 thousand hectares of economic activity territories and monitoring sites, recording new species localities in state forest territories and monitoring those found to date.
In addition to its day-to-day environmental protection work, LVM continues to take part in two environmental projects with external co-funding, the implementation of which began in 2021: “Implementation of River Basin Management Plans of Latvia towards Good Surface Water Status” (“LIFE GoodWater IP”) and “Optimising the Governance and Management of Natura 2000 Protected Areas” (“LIFE-IP LatViaNature”). Work on both projects is proceeding as planned. In order to carry out the silvicultural work required for the implementation of the “LIFE-IP LatViaNature” project in three forest pilot areas, where various habitats of European Union importance are being restored, and to successfully carry out the planned measures to eradicate the invasive Japanese rose Rosa rugosa, an open tender was announced in June 2024 for the “Management of habitats of protected species and biotopes of European Union importance in 2024 and 2025”.