Investment calculation

India, Japan and China account for a considerable amount of the consumption of tropical lumber, including teak, and it is this southeast Asian market which is growing at the highest rate. A large part of the raw material is further refined into furniture and maritime accessories for export. A great deal of the teak is used also for indoor use since it is popular and has qualities well suited for a tropical climate.Swedish imports have also increased. During the 1990’s Sweden imported 160,000 tons of raw stocks from tropical countries, which was twice as much as during the 1980’s. Imports of cut- and planed lumber from tropical countries have tripled between 1995 and 2001. (Source: Swedish Nature Protection Society)The price of teak is decided by supply and demand. A growing middle class in southeast Asia stemming from this area’s economic development is increasing demand faster than production, which results in higher prices. The average price increase over the past 30 years has been 6.6% according to the United Nation’s FAO office.

Becoming a shareowner

Investing in cultivated teak is a simple process. You purchase the newly planted teak and we take care of it for you for 15-20 years. The entire crop is harvested and the proceeds are paid to you.

The number of trees

First, roughly 1,200 saplings per hectare are planted. During year 4 or 5 and again during year 9 or 10 approximately 400 units are culled. This is necessary for the proper growth and development of the remaining trees. There are 450 units remaining after 15-20 years. The number of trees culled is based on experience. The actual number can vary.

How to read the tables

The six tables below illustrate how your investment grows over time depending on the size of the investment, the duration of growth and price increase of teak per year. Over the last 30 years the price has increased 6.6% on average.

Explanation of the first table

Column 1 represents the size of the investment.
Column 2 represents the length of time of tree growth.
Column 3 shows different scenarios of increase for the market price of teak.
Column 4 shows how many square meters your investment comprises.
Column 5 shows the estimated cubic meters of timber of your investment.
The last column shows the yield of the investment.

A clarification

It might be surprising that even 0% growth in market price gives a substantial yield. This is due to tree’s growth increasing the cubic meter mass of timber has a value in itself. The increase in value depends on the tree growing several cubic meters, which then increases the value of the initial investment.

Yield on investment

300kEngWEB

tabellteakWEBENG

The diagram shows three investment strategies with respective yield based on 300.000 EUR.
1. Traditional bank saving.
2. Mean value from the 30 most traded shares at the Stockholm stock exchange.
3. Teak value at two different increase rates.

Contact Managing Director John Björklund for further information.
Telephone: (+46) (0)31 799  0997
Email: John@svenskteak.se

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