Coillte announced its results for 2001 following its AGM in Dublin today. The Group reported that there had been good progress in many areas in 2001 but profits were reduced due to difficult trading conditions affecting the Group's businesses. Profits at €18.5 million were down from €25.5 million in 2000 but progress during the year in strategically important areas should see a return to profit growth from 2002 onwards according to Martin Lowery, Chief Executive.

Coillte attributes the reduction in profits to a number of factors. In the first quarter of the year some of the Group's major sawmill customers were in the process of completing additions to sawmill capacity with the result that demand for sawlogs was sluggish in that period. Strong competition from overseas suppliers of sawn timber, a slowdown in the construction sector towards the end of the year and lower demand for pulpwood also adversely affected both the volume of timber sold and the prices achieved.

Coillte's associated company LPCI returned to a loss making position - Coillte's share of these losses amounted to €4.4 million adversely effecting Group performance. The foot and mouth crisis also contributed to reduced profits, in particular in businesses such as private planting and tree care services.

Coillte's Christmas tree business suffered losses despite an increase in the number of Christmas trees sold in 2001. This was due primarily to a write-down of €2 million in the asset value of the business. The Group, as a prudent measure, revised the value of its Christmas tree asset to reflect the number and quality of trees in its farms and future price and production cost expectations.

Commenting on the results Martin Lowery, Coillte Chief Executive said that while the company was disappointed to see profits reduce after 8 years of successive profit growth much progress was made in 2001 which will benefit the Group's performance into the future.

In regard to the acquisition of Louisiana-Pacific's 65% shareholding in Louisiana Pacific Coillte Ireland Ltd., Mr. Lowery said that Coillte assumed 100% control of LPCI on 1 May 2002. The company will be renamed SmartPly Europe Ltd. "The acquisition is an important strategic move for Coillte as it secures the future of the biggest outlet for Coillte's pulpwood. Being able to sell the Group's full pulpwood production benefits our sawlog production and forest improvement programmes," he said adding that the acquisition will also take Coillte into the international forest products business, which is a logical and necessary next step in the commercial development of the Group.

Commenting on current performance at SmartPly, Mr. Lowery said that the business is performing well. While losses are expected in 2002, a significant improvement in performance is anticipated. Production has increased and market buoyancy is leading to higher sales to the US and higher prices in the UK and Europe. The medium term prospects are good as demand for <acronym title="Oriented Strand Board">OSB</acronym> in Europe is increasing at about 30% per annum and the company has a strong market position in key markets.

Mr. Lowery also said that further growth in demand for the Group's core products, sawlog and pulpwood, is now underpinned by the completion of investment programmes by the major sawmills.

He added that good progress was also made in 2001 in developing business opportunities based on the Group's land resource including wind energy and modular housing. The proportion of revenue generated from sources other than timber sales is continuing to grow and is now 35% up from 27% five years ago. He also said that the company is focused on achieving significant efficiency improvements. Measures currently being taken include a major investment in business information systems, a voluntary early retirement programme, reorganisation of the management structure and extension of the performance management system.

Commenting on the future outlook, Mr. Lowery said that he was confident that Coillte's profits will increase in 2002. "The recent completion of a major investment programme by Irish sawmills underpins future demand for sawlog, new business opportunities are coming on stream and the Group is capturing efficiencies throughout its businesses," he said.

Further information:
Gerry Egan, Company Secretary: 01 6635277 / 086 2591409
Mairin Delaney, Public Relations Manager: 01 6635279 / 086 2529609