Profits at State-owned forestry company Coillte fell 20 per cent to €16.4 million last year, according to figures released yesterday.

The firm, which manages the State’s forests and manufactures wood products, reported its turnover grew 1 per cent in 2012 to €262.2 million.

Its accounts show that operating profits shrank almost 9 per cent last year to €29 million from €32 million in 2011.

Operating costs grew by more than 4 per cent to €227 million from €217.6 million. The accounts show it footed a €3 million voluntary redundancy bill and took a €3 million hit on the value of its forests.

The cost of servicing bank loans and an overdraft came to €8.3 million, slightly below 2011’s interest charges of €8.5 million. The forestry group ended the year with a profit before tax of €16.4 million, 20 per cent short of the €20.75 million it earned in 2011. The group’s loans totalled €167.6 million on December 31st, 2012 ,a €2.4 million reduction on the €170 million it owed 12 months earlier.

Its balance sheet shows net assets at the end of last year of €1.18 billion, slightly down from €1.2 billion at the end of 2011.

Acting chief executive Gerry Britchfield said demand for sawn timber dipped during the final six months of last year: "The construction sector, where Coillte generates the majority of its revenue, remains a challenging environment . . ."

Coillte is facing legal action over a €23 million shortfall in its staff retirement scheme that affects 2,000 pensioners.