The first half of 2022 was successful for Rīgas Meži, with net turnover reaching 10.95 million euros, which is 1.92 million euros or 21% more than in the first half of last year. Almost half, or 49%, of Rīgas Meži’s turnover came from the sale of roundwood, according to the company’s six-month operational financial report.
Anita Skudra, Chair of the Board of Rīgas Meži: “We have performed according to plan and even better. The most significant work was carried out in forestry and the management of Riga's greenery, as well as in the areas of corporate governance and public information.” She points out that timber prices remained relatively high in the first half of the year, with a decrease in prices only observed in June. Meanwhile, the price of roundwood increased by almost a third, or 32%, compared to the previous year, and sawn timber prices rose by 16%. The demand for energy wood and its prices remain high; for instance, the prices of wood chips and firewood have doubled over the year.
Key financial indicators
Similar to last year's report, this one has also been prepared in accordance with the European Union’s International Financial Reporting Standards (IFRS). During the preparation of the 2021 report, the company's biological assets were simultaneously revalued, which significantly increased the value of Rīgas Meži, a factor also reflected when comparing the financial indicators of the first six months of 2021 and 2022 – they have increased.
Rīgas Meži’s profit in the first half of the year reached 1.7 million euros (compared to 428 thousand euros in the same six months last year). The increase in profit can be explained by the rise in timber prices on the market, the revaluation of biological assets, and the company's previous targeted improvements in management, including in financial administration. As a municipal capital company, Rīgas Meži contributes a portion of its profit to the municipal budget every year for the residents of Riga.
Production and operational costs increased by 200 thousand euros, or 3%, reaching almost 8.1 million euros (compared to 7.9 million euros in the first six months of 2021). This is due to the rising costs of infrastructure maintenance, electricity, and fuel.
In accordance with the financial goals set by the company’s capital share representative, the net profit margin should be at least 4% of turnover; in the first half of the year, this figure was 16%. Meanwhile, to ensure financial stability, the liquidity ratio should be no less than 1; in the first half of the year, it was 4.2, which means there is no liquidity risk. At the same time, the company’s management is aware of the impact of inflation on cash holdings and is taking measures for the rational use of funds.
This year, the grant allocated by the Riga City Council covers all costs for the performance of the municipality’s delegated functions, carried out by the company’s “Gardens and Parks” division. In the first half of the year, 1.9 million euros of the grant was used (compared to 0.8 million euros last year) for the execution of work. The grant covers the maintenance of nearly 400 hectares of the capital’s parks and greenery. Last year, the grant was 43% of what was required, and in 2021, Rīgas Meži covered approximately 2 million euros from other revenue sources, failing to invest the necessary funds in forest infrastructure.
Significant work carried out
In the field of forestry, the focus was on forest regeneration and supplemental planting – nearly 600 hectares were regenerated, and more than 100 hectares of forest were supplemented. After the spring ban, the maintenance of young stands resumed (52.73 hectares), as did the maintenance of regenerated areas (55.69 hectares). Work is underway to improve the scenic quality of the forests, especially in Riga, by clearing undergrowth bushes along paths popular with residents and elsewhere in the forest, thereby providing more favourable conditions for the natural regeneration of the capital's main forest tree – the pine (36.80 hectares cleared).
Maintenance work on forest roads and drainage systems was carried out, including ditch cleaning, thereby improving conditions in several hundred hectares of forest, including areas adjacent to the future Ķekava bypass.
Work is also regularly carried out in Riga’s greenery and adjacent areas – maintenance, cleaning, and landscape planting. 52.5 thousand summer flowers, 8.5 thousand spring flowers, more than 200 shrubs, 12 rhododendrons, and over 500 perennial plants were planted. Work continues on the creation of sustainable flower beds.
As warmer weather approached, parklets and woody plant and herbaceous plant arrangements in portable containers were placed and maintained. Necessary improvements are regularly carried out in children’s playgrounds, around 100 benches have been repaired, and the technical equipment for greenery maintenance has been improved, with the purchase of motorised robotic mowers that will improve the quality of mown areas and save labour resources. Solutions are being worked on to reduce waste disposal costs and for sustainable use, such as the composting of fallen leaves.
For the first time, Rīgas Meži participated in the Lampa conversation festival regarding sustainable urban forest management, participated in the Sustainability Index for the first time, winning a Silver category award, and was one of the first companies in Latvia to sign the “Zero Tolerance for Corruption” initiative, which increases and strengthens its image, reputation, and recognition. Additionally, there is regular public information sharing and cooperation with partners, neighbourhood residents, and municipalities.
Developments for Rīgas Meži in the second half of 2022 in the areas of finance and development: continuing the implementation of this year’s investment plan and preparing the budget and investment plan for next year. It is essential to carry out preparatory work to ensure the company exits the roundwood processing business, in accordance with the decisions made by the Riga City Council and the company’s council.
The six-month operational report for Rīgas Meži is available on the company’s website: Report