SCOTTISH Woodlands has predicted a surge in investment in forestry as pressure on farm incomes encourages landowners to develop other revenue streams.

The Edinburgh-based forest management to timber sales firm has also highlighted the beneficial impact on the sector of the housebuilding boom and the fall in the pound following the Brexit vote.

This has pushed up the cost in sterling terms of timber imported from key producer nations on the continent, such as Sweden.

Scottish Woodlands grew profits by around two thirds in the latest financial year to £2 million, from £1.18m, amid strong demand for timber and forestry assets in the UK.

Read more: Scots forest sales soar as timber prices hit record levels

Sales increased by nine per cent annually in the year to 30 September, to £76.8m.

Managing director Ralland Browne said the year was a very good one for the company and for the forestry sector as a whole.

The increases in turnover and profitability reflected strong performances across all the company’s operations. Mr Brown highlighted the success of the harvesting team, which has benefited from a period of buoyancy and good prices in UK timber markets.

Writing in the accounts for the year, directors noted: “The fall of sterling against the euro and Swedish Krone remains a key factor in the demand for domestic timber.”

The directors said ongoing political uncertainty surrounding the UK’s withdrawal from the European Union could affect or change the support measures for the forestry sector.

However, they added: “This is counterbalanced by a stronger likelihood that with upland farming trading conditions predicted to become tougher and farm income support … set to diminish it is likely that farming and estate clients will continue to consider maximising commercial management of their existing woodland resources.”

The directors predicted: “Clients may take the opportunity to become involved in woodland creation projects as an alternative land use to create strategic long-term forestry assets.”

Their comments raise the prospect of an increase in the area of the UK covered by woodlands.

Noting the UK Government is targeting a big rise in the supply of new homes, Scottish Woodlands said an expansion in house building combined with a weak pound could help drive growth in its timber harvesting and marketing activities.

The company benefited from a sustained increase in demand for timber from UK mills in the latest year along with strong interest in UK forestry assets and the expansion of its utilities and railways division.

Sawmilling business James Jones & Sons owns 20 per cent of Scottish Woodlands with the remainder held by employees.

A study by consultants in 2015 found forestry and timber processing contributed around £1 billion to the Scottish economy annually.

On its website Scottish Woodlands says it manages over 200,000 hectares of woodland valued in excess of £500 million for more than 1,500 clients. These include individuals in the UK and overseas, farms, private sector companies and public sector bodies.

The company describes itself as the largest supplier of private sector timber in Scotland.

It was formed following a management buyout from the Scottish Woodland Owners Association in 1986.