Coillte cites poor trading for 28% fall in profits

State forestry firm Coillte will today unveil a 28 per cent fall in profits to €18.48 million. The company will blame poor trading conditions in its core businesses - the cultivation and processing of timber.

Coillte may also announce a new chairman to succeed Mr Ray MacSharry who stepped down in February. Mr MacSharry - a former Government minister and European Commissioner - relinquished the post to take up his role as the Government's representative at the Convention of the Future of Europe.

Group turnover fell to €115.47 million from €123.29 million, while the volume of timber sold declined by 7 per cent to 2.55 million cubic meters. Revenue from timber sales fell by 11 per cent to €75.36 million, according to the company's 2001 annual report which will be published today.

"The revenue decrease was a result of pulpwood sales to wood panel manufacturers being down 41 per cent by volume compared with 2001. The availability of a large supply of sawmill residues was the major factor causing low pulpwood sales," says the report.

Louisiana Pacific Coillte - the firm's wood pulp processing joint venture - lost €12.7 million. Coillte's share of the losses, €4.43 million, further depressed the bottom line. Louisiana Pacific Coillte's poor performance was also attributed to over supply in the European wood panel market. Earlier this year, Coillte agreed to acquire the 65 per cent of Louisiana it did not own for a reported €33 million.

The firm is awaiting merger approval from the Department of Enterprise. It has assumed management responsibility of the unit and is "implementing strategies to increase output and boost sales". Losses are expected to continue in 2002 due to "continuing oversupply situation in Europe and low price levels", according to the report.

Non-timber revenues were up from €38.8 million to €40.1 million. But the firm was forced to write down the value of its Christmas tree business by €2 million. "This was the result of lower-than-expected stocking levels in the Christmas tree farms and a higher proportion of trees that are considered unusable," according to the report. The outlook for 2002 is uncertain, says Mr Martin Lowery, Coillte chief executive. The firm plans to focus on improving services to its saw mill customers and improving profitability by putting in place "new management structures, processes and business systems", he said. ...

The annual report also shows Mr Lowery was paid €241,000 last year, compared to €208,000 in 2000.