26.01.2006 - RMK sales revenue topped the one billion mark 29.09

The initial unaudited 2005 sales revenue of the State Forest Management Centre (RMK) was 1 118 million kroons, or 140 million kroons (14.3%) higher than in 2004.  RMK earned the majority of its income through the sale of cutting rights of standing forest and timber (92%). RMK’s income from other activities in 2005 was 83 million kroons.

“2005 was a complex year for the forestry sector”, said Ülo Viilup, the Director General of RMK. “The damage to forests from the January storm was estimated to be over 1.1 million cubic metres (of this, 0.6 million cubic metres was in state forests), in addition to flooded roads and unfrozen soil. In order to remedy the extensive damage caused by the storm, the logging schedule had to be changed quickly. The structure of cutting changed: clear cutting and thinning were replaced with sanitary cutting. Because of the extensive storm damage in Sweden and Latvia the demand for paper pulp timber decreased dramatically. At the beginning of summer, there was a lockout in the Finnish paper industry. The timber industry could not export woodchips which built up in the yards of warehouses. All of these factors together gave rise to an entirely new situation in the timber market.”

 In 2005, RMK sold cutting rights to 239,000 cubic metres of standing timber (360,000 cubic metres in 2004) valued at 65.6 million kroons (101.1 million kroons in 2004) at an average price of 275 (278 in 2004) kroons per cubic metre. Sales of sanitary logging rights accounted for nearly 25% of this. In comparison with the previous year, the sales volume decreased by 121,000 cubic metres. The declining sales of the logging rights of standing forest is caused, on the one hand, by RMK’s strategy approved by a development plan, and on the other hand, approximately 30,000 cubic metres of timber obtained by regeneration cutting could not be sold in November and December due to lack of interest,” said Ülo Viilup.

In 2005, RMK sold 1.84 million cubic metres of timber (1.75 million in 2004) as felled timber, in the amount of 965.5 million kroons (817.5 million kroons in 2004) for an average price of 528 kroons per cubic metre (466 kroons per cubic metre in 2004). The sale of timber increased by 90,000 cubic metres. Regeneration cutting accounted for 62% of the sales volume, thinning for 15% and the timber from sanitary cutting for 23%. “During the first half of the year, the sales price remained at a high level thanks to previously signed contracts, but as a result of the declining demand, the price of timber, especially paper pulp timber, decreased significantly in the second half of the year,” said Ülo Viilup.

In total, RMK sold the cutting rights of 2079 cubic metres of standing timber and felled timber (2114 million cubic metres in 2004), that is 35,000 cubic metres less than in the previous year. 

RMK pays 26% of the revenue received from the sale of regeneration cutting rights and felled timber into the state budget. During 2005, the revenue from the sale of regeneration cutting rights was 178.1 million kroons (178.8 million kroons in 2004). “The reduction in the revenue from forests is a result of the change in the cutting structure caused by damage from the storm, which caused a significant drop in regeneration cutting and an increase in the amount of sanitary cutting,” said Ülo Viilup.

The state forest management agency RMK is a profit-making state agency, formed pursuant to the Forest Act, whose main objective is sustainable and effective management of the state forest: renewal of forests, tending and usage of forest as well as organisation of forest protection. RMK organises the protection of game in state forests and guarantees the use of forests secured by everyone’s right.

Additional information:
Jaanus Laas
Chief Financial Officer of RMK
Telephone +372 628 1500
E-mail jaanus.laasrmk.ee