Document Type : Research Paper

Authors

• Ahmad Samariha ¹
• Majid Farzi ²

¹ Assistant Prof, Department of Engineering Sciences, Technical and Vocational University (TVU), Tehran, Iran

² Department of Engineering Sciences, Technical and Vocational University (TVU), Tehran, Iran

Abstract

Abstract
Background and Objective: The development of high-value-added and environmentally compatible wood products has gained increasing importance in line with the principles of sustainable development in bio-based industries. ThermoWood, owing to its enhanced durability and dimensional stability and its reduced reliance on chemical preservatives, is considered an important product in this context. Despite the growing market for this product in Iran, economic studies based on cash-flow analysis and investment risk assessment for the establishment of ThermoWood manufacturing plants remain limited. Therefore, this study aimed to evaluate the economic and financial feasibility of establishing a ThermoWood manufacturing plant with a nominal production capacity of 625,000 m² per year in Mahdasht Industrial Park, Karaj.
Materials and Methods: This applied study was conducted using a descriptive–analytical approach. The plant's operating capacity under the target utilization rate of 80% was assumed to be 500,000 m² per year. Fixed investment and working capital requirements were estimated at 1,494.36 billion tomans and 614.96 billion tomans, respectively, resulting in a total investment requirement of 2,109.32 billion tomans. The economic evaluation was conducted over a 22-year horizon, comprising two years of construction and 20 years of operation, using a 25% discount rate. The Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, Return on Investment (ROI), and Break-Even Point (BEP) were calculated. In addition, the sensitivity of the results to changes in the product selling price, raw wood price, and exchange rate was examined.
Results: The results indicated that the Return on Investment (ROI) in the representative year of operation was approximately 24%, while the break-even point was approximately 24% of nominal production capacity. Based on an evaluation from the perspective of the total investment, the project yielded an NPV of 21,185 billion tomans, an IRR of 65.3%, and a payback period of 4.46 years. From the shareholders' perspective, the NPV was 22,165.48 billion tomans, the IRR was 170.4%, and the payback period for shareholders' equity contribution was calculated at 2.72 years. Sensitivity analysis demonstrated that the product selling price was the most influential variable affecting the economic value of the project. In an approximate analysis based on a stable cash-flow framework, a 30% decrease in the product selling price reduced the NPV to approximately −398.63 billion tomans, whereas a 30% increase in the selling price increased the NPV to approximately 3,450.23 billion tomans. Under the pessimistic scenario, involving a 20% decrease in the product selling price, a 20% increase in the raw wood price, and a 25% increase in the exchange rate, the approximate NPV reached −260.01 billion tomans.
Conclusion: Based on the assumptions and prices prevailing in 1405 (2026), the establishment of a ThermoWood manufacturing plant in Mahdasht Industrial Park was found to be economically feasible. However, the high sensitivity of the economic indicators to the product selling price and raw wood procurement costs indicates that achieving the projected returns depends substantially on effective sales-market management and securing a reliable and sustainable supply of raw materials. Furthermore, given that 70.8% of the investment is allocated to fixed assets and that imported equipment constitutes a substantial portion of the capital expenditure, effective foreign-exchange risk management and equipment procurement planning are important factors in mitigating investment risk. The findings should be interpreted within the framework of the assumptions underlying the financial model, particularly the assumed nominal growth rates of product selling prices and operating costs.

Keywords

• Thermowood
• Thermal Modification of Wood
• Economic Feasibility
• Net Present Value
• Internal Rate of Return
• Sensitivity Analysis

Main Subjects

• Management and Economics wood