The company broke the news in its 2006 annual report released this week.
A consultancy undertook a study last autumn to assess whether the Myanmar teak sector was up to implementing the GSP, which evaluates suppliers to a range of criteria. It has now concluded that, while “the environmental aspects pose no great problems, it is impossible to shed sufficient light on whether or not human rights are being violated”.
As a result, DLH says it is “unrealistic” to introduce the GSP and “for this reason, the group has decided to discontinue purchase of Burmese tropical teak”.
The company says it will withdraw the species gradually.
“The upper limit for purchases will be reduced on a straight line basis so we will have completely phased out purchases in 2011,” said chief executive Jorgen Moller-Rasmussen.
He added that, the decision may be reconsidered, but only if Myanmar suppliers prove they can comply with the GSP and that seemed unlikely to happen.
Burmese teak made up 1% of DLH turnover in 2006.
“We recognise that our decision will impact on our business short term, and have taken the effect into account in our 2007 forecast,” said Mr Moller-Rasmussen. “But we feel it is a vital isue for DLH and in the long term we will gain by being synonymous with sustainably-produced timber. ”
Some customers may be satisfied with plantation teak as an alternative, but DLH acknowledged that others, notably boatbuilders, might not readily accept this due to colour, oil content and dimension considerations.
Group turnover jumped 34% to Dkr7.2bn last year following the acquisition of tt Timber Group of Switzerland and Swedish sheet materials distributor Ljungbergs. Pre-tax profit increased 21% to Dkr211m. Sales in 2007 are forecast at Dkr7.5bn and pre-tax earnings at Dkr230m.
