Austrian sawmill firms expand in Finland after bark beetle windfall

Austrian sawmill companies have bought several Finnish sawmills over the past decade, using profits made during Central Europe’s spruce bark beetle crisis to expand northwards, Yle reports.

The latest deal was announced in August, when Austrian company Binderholz said it would buy Kuhmo Oy, a Finnish sawmill company. The transaction has not yet been completed.

According to Henrik Heräjärvi, a professor of wood products technology at the University of Eastern Finland, Central European sawmills became extremely profitable after spruce bark beetles damaged forests in Germany, the Czech Republic and Austria during the 2010s.

Infested trees begin to dry out and eventually die. They were cut down quickly to prevent cracks from reducing the quality of the logs. The resulting volume of spruce logs entering the market caused prices to collapse.

In the Czech Republic, spruce logs typically sold for 50 to 70 euros per cubic metre. During the worst years, the price fell to 15 or 16 euros, Heräjärvi said.

Sawmills were able to buy the timber cheaply, while the prices of finished products remained stable. This made the business exceptionally profitable, Heräjärvi said.

After extensive logging, however, Central Europe began to face a shortage of spruce logs. Sawmill companies therefore started looking towards the Nordic countries and the Baltic states.

Austrian companies already control seven Finnish sawmills

Binderholz bought all shares in Vapo Timber Oy in 2016, acquiring its sawmills in Lieksa and Nurmes. In 2017, it bought a glulam and planing line in Lieksa, expanding into further processing.

In 2022, Austrian company Pfeifer bought Pölkky Oy, a wood-processing company based in Kuusamo. The deal transferred Pölkky’s sawmills in Kuusamo, Kajaani, Taivalkoski and Kitka to Pfeifer.

That same year, Austrian HS Timber Group bought the Luvia sawmill in Eurajoki.

Once the Kuhmo deal is completed, Austrian sawmill companies will control seven sawmills in Finland.

Finnish timber attracts foreign investors

According to Heräjärvi, northern sawmills attract companies because of the quantity and quality of Finnish timber. Finland has extensive forests, and the trees are considered higher quality for the sawmill industry because they grow more slowly during the long winters.

Heräjärvi also believes that investors are attracted by Finland’s stable operating environment. He said the country is highly dependent on wood, its administration supports investments in the forest industry, electricity is inexpensive, and its infrastructure and logistics system support timber procurement.

Private individuals own a large share of Finland’s forests. Selling timber is an important source of income for them, and privately owned forests pass from one generation to the next. Heräjärvi said timber availability is therefore unlikely to collapse.

Finland also experienced an exceptionally strong sawmill market a few years ago. Sawmills were able to invest in new equipment, making them more attractive to foreign buyers. Kuhmo Oy had also bought a new sawmill line only a few years earlier.

Heräjärvi said he could not explain why Austrian companies in particular have shown interest in Finland. He suggested that the companies investing in Finland are family-owned businesses that take a long-term, multigenerational view.

Limited comment from Austrian companies

Yle requested interviews from all three Austrian sawmill companies operating in Finland. Only Pfeifer, which bought Pölkky, commented, and it did so by email.

Binderholz said by email that it does not give interviews. HS Timber Group said it could not provide answers before publication, although Yle sent its interview request a week earlier.

The communication practices of Central European companies, or the lack of communication, have attracted attention in the Nordic countries before. “It may seem a little secretive to Finns,” Heräjärvi said.