Coillte plans to expand despite Balcas blow as profits rise

Coillte, the State forestry company, is examining several new avenues to expand, undeterred by the Government's recent decision to block its proposed acquisition of the Northern Ireland saw-milling company, Balcas.

Among the options being considered is the building of the company's own saw-milling network in the Republic and the acquisition of a distribution operation in Britain. Coillte is also looking still to avail of opportunities in eastern europe, according to chief executive, Mr Martin Lowery.

He said the company needed to enter overseas markets in order to grow. The company points out that the Competition Authority report which blocked the Balcas deal did not preclude options like Coillte building its own sawmill network in either the Republic or Britain. Any serious move into saw-milling in the Republic is likely to be strongly opposed by the large independent saw-millers.

Mr Lowery was speaking after presenting Coillte's annual results, which show pre-tax profits increasing to £18.1 million from £15.2 million on turnover in 1997 of £76.8 million, compared to £74.2 million the year before.

Mr Lowery said oversupply in the market and the small population base made it necessary for the company to expand abroad and make sure Coillte was developed fully. He added the company was "disappointed" by the Government's decision to block the Balcas deal, but there were "alternative avenues" available. Coillte is known to be anxious to enter markets in Britain and eastern Europe and had hoped the Balcas deal would give it an opening through that company's operations in Estonia. Mr Lowery said the option of purchasing a British timber distributor was a "serious possibility" and would give Coillte a chance to supply a "large and lucrative market".

The company is also seeking Government approval for the setting up of Coillte Consult, an independent consultancy company which would work on forestry projects in eastern Europe and Africa. The company would concentrate on transferring the operations of state-run forest services into profitable commercial companies. This would also give Coillte an opportunity to examine acquisition possibilities "on the ground" in eastern Europe.

Mr Lowery said the commercial side of Coillte's business, called Coillte Enterprises, would also be expanded in coming years. He said questions of privatising Coillte were not something the company could comment on and were a matter for Government.

The company says that, while timber revenue for 1997 only marginally increased from £55.4 million to £55.5 million, "this was a considerable achievement given the prevailing market conditions".

"Later in the year, the influence of additional competition from Scandinavian and Baltic timber producers affected sawlog prices and sawn timber sales in both home and export markets," said chairman, Mr Pat Cooney.

Mr Lowery said the company was finding it harder to acquire land for afforestation.