State forestry agency's profits fall 54pc on weaker sales to UK
COILLTE, the State forest agency that owns 7pc of the country and is branching out into alternative energy, said profits halved last year because it sold less wood to Britain and the sterling fell against the euro
The agency said pre-tax profit tumbled 54pc to €4.2m as sales dipped 17pc to €206.9m. Operating costs fell 10.5pc to €205m as the company introduced a voluntary redundancy programme for 100 employees, froze salaries and closed its factories, which make wood panels, for several weeks.
Coillte's profits fell as the British and Irish construction sector shrank. The UK is the biggest timber importer in Europe and Coillte's largest export market. Demand for timber in Ireland is just one-third of what it was during the boom, while the fall in the value of sterling has also harmed profits.
Every time the euro gains a penny against the British currency over a year, Coillte's profits decline by €1.2m.
"It's been a tough year for anyone in the construction industry," said chief executive David Gunning. "We expect 2010 to be another tough year but there are some very fragile signs of recovery."
Coillte, which was set up 21 years ago to manage the nation's forests, is reinventing itself as an environmentally friendly organisation which produces vast amounts of oxygen as well as electricity from renewable sources such as wind farms and biomass.
The agency's future is currently being considered by the Government and the agency may be forced to sell assets or even privatise.
The company is close to completing a wind farm in Leitrim and is looking to build 10 wind farms in nine counties which would produce a tenth of the wind energy Ireland needs to meet Government targets.
Coillte is well-placed to develop wind farms because the land it owns is remote but served by roads and dirt tracks, which makes access easy, Mr Gunning said.
The company has four joint- venture agreements with power companies to develop wind farms.