Good for Business, Latvia, Markets and Companies, Woodwork
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Friday, 29.03.2024, 09:06
LVM Half-Year Profit Reaches 49.2 Million Euros
“Due to the
COVID-19 pandemic, the first half of the year was very challenging also for LVM
as many Western European countries, which are Latvia's main export markets,
entered a recession with gross domestic product shrinking by 10–20%. As a
result, there was a significant decrease in the demand for wood and,
accordingly, in the average price of round timber sold by LVM, with the price
drop reaching as much as 24% in the first half of the year. In these
circumstances, LVM Supervisory Board appreciates the company's work, which
allowed the company to exceed the approved plans, support the ability of
Latvian companies to maintain their market positions and provide significant
profits,” says Jurģis Jansons, Chairman of LVM Supervisory Board.
Intensive reforestation
This year,
LVM took advantage of the favourable weather conditions and already in March
started planting forest stands, thus restoring 10.5 thousand ha of forest area
in the first half of the year. By comparison, the restored forest area accounts
for a size of almost 15 thousand standard football pitches. In turn, targeted
tending of young stands was performed in an area of 17.6 thousand ha.
LVM adjusts its operations to the conditions of the pandemic
The decline
in demand in both the domestic and export markets caused by the COVID-19 crisis
created significant uncertainty, leading some timber buyers to suspend or
change their purchasing plans. In these circumstances, LVM adjusted its
operations and in the second quarter of the year, logging was carried out
mainly in stands that were damaged by bark beetles, whereas previously prepared
round timber products were removed from forest in order to reduce the residues
of conifer assortments and limit the spread of pest.
Sales of seedlings are increasing; chips are sold in smaller volumes
In the
first half of this year, sales of forest tree seedlings increased, reaching
51.2 million units and exceeding the approved half-year plan by 3.3
million.
In turn,
revenue from the sale of wood chips decreased by 133 thousand euros as a result
of unfavourable market conditions, namely, cheap wood chips from Belarus were
available on the market, which reduced their market price in Latvia. In these
circumstances, LVM reduced the sales of wood chips.
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