Strong demand underpins healthy financial performance at Coillte

• Revenues of €479m
• Operating cash reaches record €107m
• Strong EBITDA of €157m and Operating Profit of €119m
• €27.7m dividend to State
• €45m upgrade of SMARTPLY operation completed
• Ongoing engagement on Coillte’s Forestry Strategic Vision

Thursday, 27 April 2023: Coillte today announced its financial performance in respect of 2022, building on the record results in 2021, with strong demand coupled with supply constraints continuing to underpin key metrics. Of particular note was Coillte’s revenue which reached a new high of €479m and increased operating cash of €107m.  EBITDA at €157m was broadly in line with the record level achieved in 2021 while operating profit of €119m was lower, primarily due to increased operating costs.  Growth in the construction sector meant that demand for product was strong in the first half of 2022, however, demand moderated significantly in the second half of the year.  This, combined with relatively solid pricing resulted in an overall strong financial performance in 2022. Coillte is expecting a more challenging 2023 as inflationary costs and higher interest rates impact the sector and the business.

The company has recommended an overall dividend payment of €27.7m to the State, the maximum payable under the dividend policy, in respect of 2022.

A 10-year investment programme at Coillte’s OSB manufacturing facility in Waterford culminated in the successful commissioning of the €45m upgrade of SMARTPLY’s drying, energy and screening system.  This investment will help ensure the competitiveness of what is a key forestry sector asset. Coillte continued its annual capital investment programme with a total spend of €86m in 2022.

Coillte 2022 Financial/Operational highlights

• Revenue earned in 2022 of €479m, up from €422m in 2021
• EBITDA of €157m in 2022, was broadly in line with €159m in 2021
• Operating cash flow of €107m, up from €73m in 2021
• Operating profit in 2022 was €119m, down from €135m in 2021
• Capital investment programme totalled €86m in 2022, down from €94m in 2021
• Dividend to State in respect of 2022 was €27.7m, €30m in respect of 2021
• Successful commissioning of €45m upgrade of SMARTPLY’s drying, energy and screening system
• Opening of flagship recreational offering – ‘Beyond the Trees, Avondale’
• Coillte planted over 20 million trees and replanted 8,300 hectares of forests

Commenting on the results the Chair of Coillte, Bernie Gray, said “Coillte delivered another strong financial performance in 2022. During the first half of the year, pricing, driven by a mix of demand and supply constraints in international wood and timber related product markets, was strong, albeit back from the highs experienced the previous year. There was a marked reduction in construction sector demand in the second half of 2022 which resulted in pricing trending downwards. Against the backdrop of these results, the Board is in a position to pay a significant dividend to the State which at €27.7m represents the second highest dividend in the history of Coillte. Coillte’s strong financial underpinning is important at a time when the organisation is repositioning itself to deliver on the critical role it has to play in helping achieve Ireland’s climate action targets.  Ireland’s Climate Action Plan sets out clearly the important role that forestry and wood must play in this regard.  Coillte has responded proactively by putting in place a new forestry strategic vision which contains ambitious targets including enabling the creation of 100,000 hectares of new forests, half of which will be native woodlands.    Our vision is to create a sustainable future by delivering the multiple benefits of our forests to society across four strategic pillars of climate, wood, nature and people, and we continue to engage with our stakeholders on the delivery of this strategic vision.”

Coillte’s Chief Executive, Imelda Hurley, said “Financially, we had a strong performance in 2022 despite end market prices for wood and panel board products being down from the record high levels achieved in 2021.  Prices remained relatively strong in the first half of the year with robust demand evident in the construction and home improvement sectors.  There was also a global demand and supply imbalance which created a series of supply challenges in key markets.  In addition, recent inflationary pressures had a material adverse impact on Coillte’s cost base as many of our key input costs are closely correlated to movements in gas or oil prices.  Despite this volatility, we delivered record revenue and operating cash and have proposed a significant dividend payment to the State. 

A key milestone in 2022 was the launch of our new forestry strategic vision. This new vision positions the organisation to deliver the multiple benefits of forestry and in doing so respond appropriately to the challenges posed by the global climate crisis and Ireland’s climate action targets. Ireland’s forests and forestry sector have never been more relevant to these challenges.

When I look to 2023 and our experience so far, there is no doubt that the business is seeing the effects of inflation and rising interest rates. These headwinds indicate challenging trading conditions and weaker consumer demand in 2023.”

Outlook

Long-term demand is expected to grow for wood-based products as more consumers look to substitute fossil-based products with wood-based materials.  However, the general market environment for 2023 is challenging.  High inflationary pressures across Coillte’s core markets are expected to persist for much of 2023.  Additionally, rising interest rates will likely result in lower disposable incomes with a related impact on consumer confidence. Taken together, these factors are expected to impact the commodity sector Coillte operates within, most particularly by weakening consumer demand.  Against this backdrop, Coillte’s focus is on optimising its production volumes while carefully managing the cost base over the course of 2023 and beyond.

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For further information contact:

Nuala Butner, Q4PR: nuala@q4pr.ie / 085-1744275