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Results of JSC “Latvia’s State Forests” in 2020 Exceed the Forecasts

The Supervisory Board of JSC “Latvia’s State Forests” (LVM) has reviewed the report of the company’s Board on the operational results of economic activity in 2020, which shows that the company's turnover in 2020 reached 350 million euros, and the profit before corporate income tax was 75.7 million euros. Last year, LVM paid EUR 76.1 million in dividends to the State for the use of State capital.

Jurģis Jansons, Chairman of LVM Supervisory Board: “The year 2020 brought significant challenges and shocks for the company and the entire forest industry; however, LVM 's results exceed those planned in terms of both turnover and profit. The timber sales system created by LVM has ensured stability for timber buyers and good economic results for the company. I am particularly pleased with the company's achievements in the areas of seedling growing and forestry, where the quality of the work done over the past year has made a significant contribution to the productivity, quality and health of future generations.”

Overcoming the effects of the Covid-19 pandemic

The forest sector was also affected by the Covid-19 pandemic crisis. In the first half of 2020, the pairing volume of wood products decreased, but in the third quarter of the year, as demand recovered, the volumes of sawn timber, plywood and boards exported from Latvia increased. In response to the favourable demand in export markets, Latvian processing companies increased their purchase prices, thus increasing the availability of sawlogs for further processing. On the other hand, the demand for thin-dimensional wood remained weak in the fourth quarter of the year.

However, as compared to other sectors, the timber industry has been more resilient to Covid-19 shocks. Globally, the activity of construction – the main consumer of wood products produced in Latvia – was maintained by State orders in the construction of public facilities.

Despite the challenges of 2020, LVM sold a total of 7.23 million cubic metres of round timber products last year, as well as 0.29 million cubic metres of growing trees. In turn, chips were sold in the amount of 404.1 thousand megawatt hours.

Investment in sustainable forestry

Thanks to favourable weather conditions, afforestation started already in March last year. Last year, a total of 10.5 thousand hectares of forest stands were planted, while in an area of 5.3 thousand hectares they regenerated by themselves. Tending of young stands was performed in an area of 31.4 thousand hectares.

In 2020, the company's structural unit “LVM Seeds and seedlings” (LVM Sēklas un stādi) sold the largest amount of forest tree seedlings to date – 56.4 million, which is slightly more than a year before. Of these, 28.6 million were used for reforestation in State forests, and 27.8 million seedlings were sold to other buyers in Latvia or abroad.

Forest owners are increasingly choosing to plant new forest stands, thus the demand for quality planting material is growing every year. In order to increase the capacity of nurseries, the production area of Podiņi Nursery was increased last year, with an additional 23 hectares adapted for growing plants. In 2020, intensive work was carried out on the establishment of the new container seedling nursery “Mežvidi” in Jaunkalsnava.

In 2020, the company invested a total of 53.5 million euros in its development, including 77% or 41 million euros in forest infrastructure – construction of forest roads and bridges, as well as renovation of forest drainage systems. These investments will provide a return in the near future, strengthening the competitiveness of the entire Latvian forest sector in world markets.