Precious Woods plants itself on stock exchange

Precious Woods has made its debut at the bourse in Zurich. Precious Woods

The Swiss stock exchange welcomed an unusual newcomer on Monday - Precious Woods, a pioneer in the sustainable use of trees from rainforests.

Founded in 1990, Precious Woods moved to Switzerland from the Virgin Islands last year as part of its plan to go public.

The company, whose main shareholders are banks, insurance companies and Swiss pension funds, has issued 180,000 new shares with a nominal value of SFr50 ($30.08) to bring its share capital up to SFr81 million.

“The step to go through with the IPO on the Swiss exchange had, as its main intent, to broaden the investor base and give us better access to the capital markets,” chief financial officer Ted Scheidegger told swissinfo.

“In that way we can raise capital for further expansion projects and also improve the liquidity of Precious Woods for existing investors,” he added.

The company wants to demonstrate through its activities that sustainable use of forests combined with the processing of the timber is more profitable than short-term destruction.

Attractive jobs

It processes valuable hard timber species locally and targets a high added value. It aims to create attractive jobs to give families a better lifestyle in remote and disadvantaged areas and conserves large, potentially endangered forested areas, or reforests where no trees remain.

Precious Woods owns 1,494 square kilometres of forests in Brazil’s Amazon region, all managed according to the strict criteria of the Forest Stewardship Council, which means the lands are protected from deforestation and illegal clear cutting.

As a rule, three to six trees are felled per hectare and subsequently used as lumber or made into furniture. The company uses the timber of about 40 types of trees, whereas conventional logging firms generally limit usage to a few expensive types of wood.

Precious Woods says no activities are carried out in areas permanently or temporarily used by indigenous people.

Primarily teak

In Costa Rica, the company owns and manages 4,188 hectares of plantations, primarily teak and about 20 indigenous species of trees.

Revenues at Precious Woods grew in 2001 to $10.55 million, up by 54 per cent over the previous year. The company made its first profit in 2000 of $551,000, a figure that is expected to increase substantially both for 2001 and 2002.

“The founders of Precious Woods were Swiss and the initial activities of the company were primarily financed through Swiss pension funds,” Scheidegger told swisinfo.

“In Switzerland, we encounter a great deal of enthusiasm for these types of projects because sustainability and its combination with economic, meaningful activity is an investment theme that is very well received in this marketplace,” he added.

Competitive edge

In a study of Precious Woods, UBS Asset Management said last year it had subscribed to the newly issued shares, noting that the company’s many years of experience with the Forest Stewardship Council label provided it with a competitive edge.

It also noted that the demand for certified timber was expected to increase.

The company has said it intends to buy an additional 558 square kilometres of forest in Brazil this year and expand the plantations in Costa Rica by 400 hectares.

“To my knowledge Precious Woods is one of the very few companies that has actually demonstrated that a balance between economic objectives and ecologically sound activities can be achieved,” Scheiddegger told swissinfo.

by Robert Brookes