Strong financial and operational performance for Coillte in 2019 despite challenges

Strong financial and operational performance for Coillte in 2019 despite challenges

• Zero net debt achieved in 2019
• Revenues of €327.4m and EBITDA of €102.8m
• 22 million trees planted across 9,000 hectares of restocked forest

Friday 29 May, 2020: Coillte, Ireland’s largest forestry and land solutions company, today announced its annual results for 2019. The company delivered a strong financial performance despite some Brexit headwinds and significant downward pressure on prices for its key products. Earnings before interest, tax, depreciation and amortisation (EBITDA) of €102.8m was down on the previous year’s record of €115m while revenues of €327.4m was slightly down on 2018’s record year of €330.3m. Operating cash flow was €54.2m while a zero net debt was recorded at the end of 2019 for the first time in Coillte’s history.

The strength of the underlying  2019 financial performance is evidenced by the fact that the business had to deal with increased market turbulence in the second half of the year and additionally, when account is taken of the reduction in recurring EBITDA and operating cash of  €7m which arose directly as a result of the sale of the majority of Coillte’s operating wind farms in 2018.

Commenting on the results the Chair of Coillte, Bernie Gray, said: “Despite a very challenging market environment Coillte delivered a strong financial performance in 2019 with EBITDA at €103m, it was second only to the record performance in 2018. The challenging backdrop was caused by a combination of continued Brexit uncertainty and a 15-20% price decline in our key products due to an excess supply of sawnwood from mainland Europe. The company’s financial transformation in recent years resulted in a debt free position at the end of 2019 and this provides us with a strong foundation for the growth and investment programmes going forward. In the coming years, Forestry will play a key role in our economy and society as we deal with the twin challenges of Climate Action and Biodiversity protection. The most effective way to ensure our success in these areas is by having the financial strength and resources which allow us to continue building a strong, vibrant commercial business, which balances the economic, social and environmental dimensions of forestry.

2019 has been a year of transition for Coillte in many ways. The heightened societal and economic focus on sustainability over the past year has placed new demands on Coillte to play a larger role in shaping Ireland’s future in this regard. At the same time, we are also conscious of our responsibility to optimise our Forests as one of Ireland’s key assets. In this regard we are very keen to play our part in delivery of the new national afforestation targets of 8,000 hectares per annum under the Climate Action Plan. I believe we can best achieve this in the context of a new national land use policy.

The recent advent of Covid-19 will have significant impacts for Ireland and indeed across the globe. Coillte will also be impacted in 2020, but our team are focused on adapting to and addressing the emerging reality. Forestry has never been more relevant than it is today and I look forward to working with all of my colleagues in Coillte and with our shareholders in continuing to deliver for Ireland and its citizens in the years ahead.”

 Imelda Hurley, Coillte’s Chief Executive, said “ In 2019 the business generated EBITDA of €103m and Operating Cash of €54m, close to our record breaking year in 2018. The strength of the underlying 2019 performance is particularly evident when we take account of the sale of the majority of our operating wind farms in December 2018, as they accounted for €7m in recurring EBITDA and Operating Cash.  It is also very encouraging that for the first time ever, the Group is debt free. At the end of 2019 we had net cash balances of €4m. This provides us with a strong foundation for the growth and investment programmes we are planning in the coming years. 

The market environment in 2020 is and will continue to be particularly challenging. The Covid-19 Pandemic is clearly changing the market dynamic and will have a very significant impact on our business for at least this current year. We are also being impacted by a slowdown in the approval of forestry felling licences as a result of new procedures introduced by the Department of Agriculture, Food and the Marine in 2019 and these have, to date, impacted on the availability of timber that we can place on the market through auction. In addition, with the largest market for Irish sawnwood and timber products being the UK, the UK’s future trading arrangements with the EU are an important and as yet unknown variable which may impact the 2020 market dynamics towards the latter part of the year. As a result of these challenges we are projecting a significantly weaker financial performance in 2020 compared to 2019.”

The annual report can be accessed here: LINK TO ANNUAL REPORT

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