Total production for the Finnish forest industry rose by approximately 3.5% in 2002, which partly compensated for the drop experienced in 2001. However, it still fell short of the level achieved in 2000.

Sawn wood production rose by nearly 5% in 2002 and totalled 13.3 million m3, while plywood production reached a record 1.2 million m3, due to an increase in capacity.

Finnforest achieved operating profits of €34.9m in 2002 – a clear improvement on the previous year’s loss of €17.1m. The company says that the hallmark of 2002 was a stabilisation of operations. It focused on taking advantage of the market shares brought by earlier acquisitions and investments, increasing efficiency and reaping the benefits of internal development programmes.

The most successful units in 2002 were Finnforest UK and the Norwegian subsidiary Moelven which focuses on its main market of Scandinavia. Finnforest UK continued its strong performance: sales volumes increased and profitability was good and the acquisition of Montague L Meyer‘s pine timber distribution and processing operations strengthened its position.

Timber procurement

Finnforest’s parent company Metsäliitto has increased its interest to 50% in a timber procurement company in Germany by acquiring 16.66% of SCA‘s shares in SCA Holz. In conjunction, the two owners have agreed that they will have joint control in the company. As a result, the company will now be known as THOSCA Holz GmbH.

The move will give Metsäliitto a more active role in the development of timber procurement in central Europe and at the same time secure raw material supplies if the group’s industrial company makes investments in the area.

SCA Holz acquires 5 million m3 of round timber and chips a year and is one of the forest industry’s biggest operators in central Europe. The transaction will require the approval of the competition authorities.

A transaction that has just received approval by the competition authorities is the acquisition by Stora Enso Timber of 66% ownership of AB Sylvester‘s sawmilling operations and Stora Enso Mets’ 100% ownership of Sylvester’s wood procurement operations in the Baltic states. AS Sylvester is Estonia’s largest sawmilling and wood procurement company. The name of the company will now be changed to Stora Enso Timber AS and will form a new Baltic production group within Stora Enso Timber.

The acquisition offers significant synergy potential and provides a platform for further growth. In addition to a sawmill which AS Sylvester had already started to build in Lithuania, a €50m investment programme will be carried out this year at all the present mills at six locations in Estonia and Latvia.

On a more general note, Stora Enso reported a sharp increase in operating profits for its timber products division from €12.6m in 2001 to €46.8m in 2002. Overall consumption for 2002 was rather high, although consumption indicators are pointing slightly downwards in Europe, Japan and North America. Stora Enso says that market conditions are expected to remain slightly positive for the first half of 2003, but profitability will be under pressure from currency fluctuations and changes in freight rates.

UPM-Kymmene reports that turnover for its wood products division was about the same as in 2001 but profitability was still unsatisfactory. This was due to the sawmilling business suffering from high raw material costs and low sales prices as a result of oversupply.

The plywood business was less profitable than in the previous year as fierce competition forced prices down. Business in the wood-based building supplies sector was brisk, especially in Finland and Ireland and profitability was better than the year before.

The Finnish forest industry, through the Finnish Forest Industry Federation, has come out strongly in support of action to eradicate illegal logging. It is aware that not only does illegal logging distort competition but that wood that has been illegally obtained adversely affects the public image of the entire industry.

Sustainable forestry

The FFIF draws attention to the fact that illegal logging often goes hand in hand with ignoring the importance of sustainable forestry which can jeopardise the development of forest resources and, subsequently, the long-term supply of timber.

The organisation emphasises that the Finnish forest industry has been active in promoting legal operations both by leading the way in verifying the origin of wood and by actively promoting forest certification.

Meanwhile, highlighting the fact that Finland is in the forefront of timber construction innovation, a spectacular structure has been erected at the Helsinki zoo. The observation tower was designed by Ville Hara, a student of architecture at the Helsinki University of Technology, and fellow students at the university were involved in the development of the structure and its erection.

The tower’s basket-like load-bearing structure is woven out of thin glulam battens that have been laminated from four 15mm strips of spruce into seven different shapes. The reticulated shell structure, which has never been used in Finland before, has over 600 joints. The twisting and bending of the glulam ribs into their final shape was done on-site by steaming the pre-bent battens in air ducts. The finished two-storey tower stands 10m high.