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's activity report 2022

Introduction

Forest Management AS was established on June 21, 1996 and mainly deals with forestry.

The main activities of the company are logging, real estate (residential, commercial and agricultural land) purchase and sale, value addition, development and management, and gravel and sand mining.

Forest Management AS belongs to the consolidation group AS Vestman Energia.

On 10.02.2022, Forest Management AS (merging entity) and AS Vestman Forest Fund (merged entity) signed a merger agreement. The transactions of the merged entity are considered to have been made from the account of the merging entity from 01.01.2022. The merger came into force on 22.04.2022.

On 03.06.2022, Forest Management AS (merging entity) and OÜ Pihuvere Gravel (merged entity) signed a merger agreement. The transactions of the merged entity are considered to have been made from the account of the merging entity from 01.01.2022. The merger came into force on 12.08.2022.

Since 26.04.2017, the forests of Forest Management AS have been certified with the FSC group certificate of forest management and supply chain of the United Forest Owners MTÜ. The FSC certificate ensures that the wood product comes from a well-managed forest, which provides environmental, social and economic benefits. The certificate shows that the forest owner manages their forest responsibly. The FSC certificate gives forest owners an advantage in a difficult economic situation where the supply of wood exceeds demand.

The war that started in Europe and the energy crisis caused by Russia significantly affected the developments in the timber market, causing price changes that were unpredictable and volatile. The prices of coniferous logs rose until the second quarter, but then stabilized slightly and remained in place. Until the end of the third quarter, the fluctuations in the prices of pulpwood and firewood were unprecedented. Every week, prices rose to new record levels and the long-standing proportions of timber prices changed significantly.

The increase in demand for birch pulpwood drove its price to new heights. In 2022, the average forest material sales price increased by a whopping 43% compared to 2021. Due to high energy prices, the costs of processing forest material and other costs also increased. The price of firewood rose to a new record level and only began to fall at the end of the year.

Forestry involves a wide range of activities, including forest restoration and increasing the economic value of young forests. One important method is thinning, which helps shape valuable future stands. Forest Management AS uses a Malwa harvester designed and produced in Sweden for thinning, which has several advantages, including low specific pressure on the ground and the ability to maneuver in narrow conditions and wet habitats.

There are several options for forest restoration, such as soil mineralization, establishment of coniferous forest cultures and increasing the economic value of young forests with light cutting. In addition, carbon sequestration and ensuring biodiversity are important. The volume of forest cultivation work has continued to grow, for example, in 2022, Forest Management AS established the first reforestation area, which covers 4 hectares of former grassland, with the aim of sequestering carbon and ensuring biodiversity.

In general, it can be said that forestry is an important economic sector that affects not only the economic value of forests, but also the natural environment as a whole. Therefore, it is important to take into account both economic and environmental aspects when planning and implementing activities and to find a balance between them. Effective methods for forest restoration and young forest management are important to ensure the sustainability of forests and their use for future generations.

Revenues, expenses and profit In 2022, the sales revenue of Forest Management AS was 8.2 (2021: 8.5) million euros. Sales revenue consisted of 91% (2021: 96%) of roundwood and growing forest cutting rights sales, 5% (2021: 1%) of real estate sales, 4% (2021: 3%) of rental income.

The gross profit of Forest Management AS in 2022 was 1.8 (2021: 1.8) million euros, operating profit 11.1 (2021: 8.3) million euros, net profit 10.1 (2021: 11.3) million euros. A significant part of the profit was provided by the revaluation of biological assets to fair value in the amount of 5.8 (2021: 6.6) million euros.

Significant environmental impacts on business

The impact of the Estonian forestry sector on business is multifaceted and can be both positive and negative.

On the one hand, Estonian forests are rich and diverse, which provides a great opportunity for forestry activities. In addition, the forestry sector is an important economic sector that creates jobs