STATE-OWNED forestry company Coillte is likely to cut jobs from its workforce of 1,200 after warning the Government that it will incur a loss this year.
Chief executive David Gunning declined to quantify the loss he currently projected for the company, whose profits collapsed last year as a result of the sharp downturn in residential property construction and sterling’s weakness.
“Across the board, everything is on the table,” Mr Gunning said in respect of a plan to reduce the company’s cost base. Asked how many jobs might be threatened, he declined to comment. He said “there’s work to be done” to determine what was required.
Coillte has already introduced a series of continuing temporary lay-offs in its wood panel unit, where 320 staff in Waterford and Clonmel are working only three weeks in four. Capital expenditure would be cut this year to “€40 million or below” from €58 million, Mr Gunning said.
Net profit dropped to €9.2 million last year from €40.1 million in 2007 and revenue fell to €249 million from €318 million. A payment of €2.6 million to the Exchequer was the company’s maiden dividend to the State.
“Given the sudden deterioration in the trading environment during the year, delivering a profit is a reasonable result,” Mr Gunning said. “Nonetheless, we are disappointed with the fall in profits from 2007.”
He attributed a little less than 40 per cent of the decline in profit to lower timber sales, which dropped to 2.3 million cubic metres from 2.6 million. A little more than 40 per cent of the decline was attributed to price cuts taken to meet falling demand, with the price of log and panel products falling 12 per cent in 2008.
Reflecting the fact that most panel sales were made in Britain, the remaining 20 per cent of the profit decline was due to sterling’s weakness.
He said company prices were likely to drop by an average of 10 per cent this year given the deterioration in economic conditions. “We expect it to be tougher than 2008. We anticipate that we will be in a loss-making position.”
Last year his remuneration rose to €489,000 from €409,000. This included a €74,000 bonus, paid early in 2008 in respect of his performance in 2007.
Coillte entered the wind energy sector in joint venture with the ESB last year when construction got under way on a 30 megawatt wind farm in Co Leitrim. Co-developments with SWS and Viridian are also under way.
