Active Energy Group (LON:AEG), which provides woodchip for MDF and biomass products, posted its first ever operating profit in its latest quarter but said profitability was hit by the conflict in Ukraine.
The three months to end September was the first period that showed the positive effects of its acquisition, announced in June, of Nikofeso - a Ukrainian wood processing and distribution group, it said.
In the quarter, the group produced and traded more than 63,000 metric tonnes of wood chip compared to 54,802 tonnes in the second quarter - most of which was shipped from Ukraine via the Black Sea to Turkish MDF manufacturers. Revenues increased to US$6.93mln compared to US$5.89 million in the second quarter.
The company had expected significantly higher volumes but due to Ukraine stopping coal and iron shipments from the east of the country, there were port delays for all exporters.
The firm's Ukrainian operations have now been relocated to a dedicated facility on the Black Sea and new high-volume wood chipping equipment purchased earlier in the year is now fully operational, the firm highlighted.
Gross margin in the third quarter was US$1.15 million - a considerable improvement over the first half, 2014 figure of around US$0.55 million.
As a result, the business has almost reversed the adjusted operating loss on continued operations in the first half of around US$500,000, which the board expects will enable its core operations to, for the first time, achieve a break-even result for the full year to Dec 31, 2014, it said.
The group is seeing continued strong demand from the Turkish MDF manufacturing sector and is to focus its production resources on this market for the foreseeable future, it said.
Richard Spinks, chief executive, said: "The results in Q3:2014 demonstrate that our investment in upgrading our production facilities, and in reducing our administration overheads while improving our financial reporting systems, is already reaping benefits, and together with the other new business activities that we are undertaking, this augurs well for the future of our business.
"It should be noted that we are utilising the funds from our profitable Ukrainian operations to fund our continued investment in the group's Canadian forestry joint venture, about which the board remains very positive."