Czech State Forest Agency Reports 19% Profit Decline in H1 Due to Bark Beetle Calamity

Lesy České republiky (LČR), a state-run organization responsible for managing nearly half of the forests in the Czech Republic, has reported a 19% decline in gross profit for the first half of the year, amounting to 3.85 billion CZK compared to 4.73 billion CZK in the same period last year. This decrease is attributed to a 21% reduction in timber harvesting, which amounted to 3.8 million cubic meters, primarily due to the ongoing bark beetle calamity.

Eva Jouklová, the spokesperson for Lesy ČR, explained, “Lesy ČR is gradually returning to management that is not affected by the calamity. The smaller volume of timber harvesting documents this, lowering revenues and economic results.” Consequently, the company’s revenues decreased by 13% year-on-year, reaching 8.22 billion CZK by the end of June.

Despite the decline in gross profit, Lesy ČR noted an improvement in operational profit per harvested cubic meter of wood, which increased by 28 CZK in the first half of the year compared to the previous year. This improvement is attributed to cost-saving measures in forest protection and the effective management of the bark beetle calamity.

Looking ahead, Lesy ČR anticipates a year-on-year decline in gross profit to approximately 4.9 billion CZK, down from last year’s 6.7 billion CZK. This decline is expected due to lower timber harvesting and a projected drop in wood prices. The organization aims to reduce timber harvesting in state forests to 8.5 million cubic meters this year, returning to levels observed before the outbreak of the bark beetle calamity in 2018.

To facilitate recovery, Lesy ČR plans to increase its investment expenses from 1.3 billion CZK last year to 2.5 billion CZK in 2022. A significant portion of these investments will focus on restoring damaged forest roads in the areas most affected by calamitous harvesting, with repair expenses set to rise by 60% to 1.1 billion CZK this year.

The forestry industry in the Czech Republic endured considerable challenges during the period of falling timber prices between 2018 and 2020, primarily linked to the bark beetle calamity. Lesy ČR suffered a loss of 790 million CZK in 2019 but managed to maintain a modest profit of 44 million CZK in 2020 thanks to state compensation for timber price declines due to the calamity, totaling 2.3 billion CZK. Despite ongoing challenges, the organization is gradually returning to regular forest management practices while prioritizing investments to support its recovery.

Article by Prague Forum

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