State forestry group Coillte increased its turnover by 16 per cent in the first half of the year as a result of changes to the operation of the business over the past three years, a multimillion euro investment in new technology and a focus on higher-margin timber products.
Coillte has also secured two additional warehouses in Britain to stockpile its timber products as a contingency measure against a hard Brexit, and delays to goods being shipped through British ports. Some 70 per cent of Coillte's exports are to the UK.
Coillte’s turnover rose to €173.4 million in the first six months of this year compared with €149.5 million in the same period of 2017.
The company, led by chief executive Fergal Leamy, also recorded a 62 per cent rise in its Ebitda (earnings before interest, tax, depreciation and amortisation) to €57.7 million.
Importantly, the State company’s operating cashflow increased fourfold to €35.3 million, with its cash yield rising to 5.4 per cent at the end of June compared with 1.5 per cent a year earlier.
“Part of the transformation that we’ve put in place is to put a real focus on operating cashflow, which is essentially what you’re generating from everyday activities and it doesn’t include any one-off sales” Mr Leamy said. “The business is performing well.”
Net debt down
Coillte’s net debt also reduced in the period from €169 million at the end of June 2017 to €134 million this year.
The forestry company expects to close this year practically debt free following its recent sale of wind assets to Greencoat Renewables for an equity value of €136 million.
Staff numbers have also reduced, from 831 at the end of June 2017 to 805 this year.
In relation to Brexit, Mr Leamy said: "We are doing everything we can that's within our control but who knows where this is going to go. We have secured warehousing in Scotland and just outside of London. We're also looking at getting optionality on shipping to ensure that we have got options to [move products] to the Continent [without using Britain as a land bridge]."
Mr Leamy said the warehouse in Scotland has been secured on a 12-month deal while the length of term on the other still under negotiation. He said each of the warehouses could hold a two- or three-week supply for the British market, if required.
"This gives us the necessary flexibility in the event of delays at ports," Mr Leamy said, adding that the company has also resumed exports to the United States in a bid to diversify its customer base.
