czech republic

Lesy ČR expects an increase in logging

Article by Martina Nöstler (adapted for; translated by Eva Guzely) | 16.03.2020 - 08:36

This year, the state-owned company Lesy České republiky (LČR) expects an increase in logging to a new record volume of over 15 million m³ compared to the 13.9 million m³ which were logged in 2019. The reason is the removal of wood damaged by bark beetle and storm calamities. According to Josef Vojáček, managing director of the state-owned company, this is why Lesy ČR recorded CZK 1 billion (around € 39 million) in losses last year.

In 2020, 95% of planned logging will concern wood damaged by bark beetles and windthrow. “Storms Sabine and Julie caused around 1.5 million m³ of damaged wood,” says Vojáček regarding damage by storms in February. In normal years before the massive spread of bark beetles, around 8 million m³ were logged annually.

According to Vojáček, the timber market is complex due to the Europe-wide log wood supply. “The situation will remain complicated. Timber prices have reached historic lows.” This year, the company has taken the timber business mainly into its own hands. The sales department now has 75 employees and more than 2 million m³ were already sold this year. According to Vojáček, the coronavirus epidemic in China can also be an obstacle for timber trade because many companies export timber from Central Europe to China. “Lately, the supply chain to China has become a big problem,” explains Vojáček. Forest owners in the Czech Republic do not export timber directly to China, but their timber can be transported via trading companies.

Last year, Lesy ČR recorded around CZK 1 billion (€ 39 million) in losses and took out loans. In 2018, the company had profits of CZK 70 million (€ 2.7 million). The reason for the decrease is the accumulation of damaged wood which led to an oversupply with log wood on the market and subsequently to a fall in prices. According to Vojáček, the actual losses could still increase or decrease by 10%. “This deviation is due to a possible re-assessment of the timber stock which we stored in 2019,” he says. If the price of timber stocks is reduced, losses would be higher.

According to Vojáček, the financial result of 2020 will depend on the development of this year’s bark beetle population. Lesy ČR expects losses to reach up to CZK 1.9 billion (around € 74 million) this year. Vojáček expects to be in the red until the end of 2023. In 2024, the state-owned company is to generate profits of CZK 409 million (€ 16 million). In times without bark beetle catastrophes, the company claims to have recorded “billions in profits” (note: CZK 1 billion = around € 39 million).