State-owned company Vojenské lesy a statky ČR (VLS) has announced an impressive profit of 680 million Czech korun in 2021, marking a substantial 46% increase compared to the previous record profit. The company’s net turnover also experienced a notable surge, rising by almost 12% to reach 3.76 billion Czech korun. The outstanding financial performance can be attributed to a significant increase in demand for timber and the upward trajectory of timber prices. VLS primarily manages forest land in the training areas of the Czech Army, encompassing approximately 126,000 hectares, which represents around 5% of the Czech Republic’s total forested area.

Zdeněk Čejdík, Chairman of the Supervisory Board, described 2021 as possibly the most successful year in the company’s history in terms of performance. The remarkable profit growth in 2021 amounted to 466 million Czech korun, reflecting a staggering year-on-year increase of 832%.

Roman Vohradský, Director of VLS, emphasized the company’s ability to adapt flexibly to the evolving demand for timber, which significantly contributed to its financial success. He stated, “Thanks to this, we could practically increase the monetization of all timber assortments during the year.”

VLS supplied 0.89 million cubic meters of raw timber to the market, with prices experiencing a steady ascent throughout the year. While the average price per cubic meter was approximately 1800 Czech koruna at the end of 2020, it rose to nearly 2400 Czech koruna at the end of 2021. This surge in timber prices resulted in revenue growth exceeding 290 million Czech korun compared to the previous year. The annual report reveals that the average price per cubic meter of timber in 2021 stood at 2125 Czech koruna.

Despite the company’s exceptional financial achievements, the report also sheds light on challenges faced by the forestry industry, particularly in Europe. The economic situation in the region, influenced by the conflict in Ukraine, led to limitations on the purchase of roundwood from Russia and Belarus due to sanctions. Additionally, the departure of companies from Russia and the scarcity of building materials, including timber, further impacted the market.

Notably, the demand for coniferous timber reached its peak in the second quarter, resulting in historically high prices. Furthermore, the report underscores the surge in demand for fuelwood or chips, which led to resource shortages for the processing industry.

In terms of timber harvesting in military forests, 913,000 cubic meters were harvested in 2021. Of this volume, 69% was incidental logging, primarily driven by damage-related factors. Wind damage accounted for approximately half of the incidental logging volume, while the share of bark beetle-related damage decreased significantly from 44% in 2020 to 22% in incidental logging.

VLS’s record-breaking profit and substantial growth in 2021 highlight the company’s ability to capitalize on increased timber demand and rising prices. The success of VLS reinforces its position as a key player in the forestry sector and underscores the significance of the industry in the Czech Republic’s economic landscape.

Article by Prague Forum