Coillte hoping to shake off licensing crisis and return to growth next year

The lack of approved forestry licences resulted in supply shortages and a consequent decline in sales
Coillte hoping to shake off licensing crisis and return to growth next year

The backlog in the Department of Agriculture's forestry licensing system impacted Coillte's earnings and revenues last year.

State forestry company Coillte is targeting a return to normal operating cycles by the end of this year, and a resolution to the forestry licensing crisis which led to a 36% drop in its 2020 earnings.

The company reported earnings of €66m for 2020, compared to a €103m profit in 2019; while revenues fell from €327m to €285m last year.

Last year was blighted by a change in Department of Agriculture regulations around licensing, which led to a severe backlog of new licence approvals.

Licence backlog hampered operations

Coillte needs licences for every aspect of its work — from tree-planting, to felling, to timber transportation — and would normally work on a 12-18 month licensing cycle. 

The licence delays meant Coillte was only able to farm a fraction of its forest land and heavily impacted its log sales to sawmills.

Sales also fell at Medite Smartply, Coillte’s timber panelling and MDF product business, with Coillte having to import pulp and woodchip to service its needs due to the licensing slowdown.

'Most difficult challenge' of 2020

"The forestry licensing crisis was the most difficult challenge faced by our sector and an enduring feature of the year which significantly constrained sawlog supplies to customers," said Coillte chief executive Imelda Hurley.

"The lack of approved forestry licences resulted in supply shortages, a consequent decline in sales and market share and led to substantial supply chain inefficiencies," she said: 

It is now critical that forestry licensing levels further increase, including for felling, road building and for afforestation, such that the sector can avoid further supply shortages this year and can begin to resume normal operational activities.

Ms Hurley said Coillte is on course to remain profitable this year and is targeting a resumption of normal operational cycles and profit growth in 2022.

Wind and renewables venture with ESB 

She said the group is in a “solid position” for the current year due to it exiting 2020 with net debt of €28m.

Meanwhile, Ms Hurley said Coillte’s wind farm and renewable energy joint venture with the ESB should finally become a reality in the coming weeks. 

Agreed in 2019, it was approved by the Competition and Consumer Protection Commission earlier this year and now awaits shareholder approval, which is likely to be a formality.

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