FORESTRY heavyweight Scottish Woodlands has recorded a surge in profits amid strong demand for timber from housebuilders with the weakness of the pound helping it compete against imports.
However, the company has highlighted uncertainty about how Brexit will impact on support for the key forestry sector.
Edinburgh-based Scottish Woodlands increased profits by 45 per cent to £2.9 million in the year to September 30, from £2m in the preceding year, as it felt the benefit of strong conditions in the housing sector.
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Turnover at the firm, which manages woodlands and associated harvesting operations for owners, rose 20% annually, to £92.3m.
The growth highlights the role the strength of the housing market is playing in stoking activity in the wider economy in the UK.
In the accounts for the firm directors noted: “The factors that influence timber demand have not altered substantially. Politicians regularly refer to the requirement for new homes and new house building is increasing.”
Noting that housebuilders are reporting an encouraging outlook, the directors added: “Sterling remains relatively weak and global wood demand is strong, indicating a generally positive outlook for the coming year.”
The directors underlined the importance of the fall in the pound against the euro and the Swedish Krone, which they said remained a key factor in the demand for domestic timber.
The fall in the pound since the Brexit vote in 2016 has made it cheaper for overseas buyers to buy goods priced in sterling and to acquire assets in the UK.
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Scottish Woodlands directors highlighted strong international demand for UK forestry assets, accompanied by keen domestic interest.
The company’s success will be welcomed by champions of the forestry sector, which reckon it can play an important role in the country’s economy while helping to tackle climate change.
Industry body Confor says forests are creating a new, vibrant rural economy based around wood, a renewable product, and providing tens of thousands of often skilled, relatively well-paid jobs across the UK.
However Scottish Woodlands directors noted: “The continuing uncertainty surrounding the withdrawal from the EU remains a point of concern with regard to the support measures to the UK forestry sector.”
They added: “There have been positive political statements regarding ongoing grant aid and a desire to see an increasing level of new woodland creation.”
Read more: Scotland ‘smashes’ tree planting targets as nation’s landscape goes back to woods
Changes in the world of farming could encourage people to increase investment in woodland.
“Tough agricultural trading conditions and the possibility of farm income support for direct agricultural activities diminishing in the future it appears that a number of farming and estate clients will actively consider maximising commercial management of their existing woodland resource,” observed the directors.
“Clients may therefore take the opportunity to become involved in woodland creation projects as an alternative land use.”
Announcing the results for the parent SWL body, managing director Ralland Browne highlighted the efforts that are being made to encourage younger members of the farming community to plant trees. These include a new award for Farm Forestry sponsored by Scottish Woodlands in this year’s Scotland’s Finest Woods Awards.
Mr Browne sits on the Confor board.
Scottish Woodlands is 80% owned by its employees with the remaining 20% held by sawmilling business James Jones & Sons.
Scottish Woodlands has 154 staff across the UK. Its 17-strong network of offices stretches from Dingwall to Wrexham.
A study in 2015 found forestry and timber processing contributed around £1 billion to the Scottish economy annually.
SWL grew pre-tax profits to £3.26m from £2.29m.Mr Browne said all areas of the business were performing well.
In the accounts for its latest financial year Scots sawmilling giant BSW Timber noted uncertainty regarding the impact of Brexit but said it was benefiting from a continuing recovery in UK demand.
BSW made £2.6m profit in the year to end March 2018 after losing £2.1 in the preceding year. Its turnover increased to £304m from £286m.
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