Scottish timber processor BSW Timber has warned of challenging conditions ahead following a 68% drop in pre-tax profits.
The firm, which is based at Earlston in the Borders, reported pre-tax profits of £2.2million for the year ending 31 March 2013, down from £6.8million previously.
Operating profits at the UK’s largest sawmilling business were also hit, decreasing by 60% to £3million, from £7.6million previously.
Sales at the firm, which supplies sawn timber products to the construction, pallet and packaging, fencing, garden and DIY product sectors, were down nearly 12% to £159million from £180million previously.
In a report with the accounts published by Companies House, BSW said: “2012-13 was a less profitable year than 2011-12, as the market was more competitive for sales volume and log prices did not fall sufficiently during the period.
“2013-14 will again be a challenging year, but the company will continue its investment programme accordingly,” said the report.
BSW said the key risks facing the business were exchange rate volatility, the demand for sawn timber products and a consistency of flow of raw material.
The company said it continued to invest in processing efficiency and new products, to better serve existing and new markets.
“The directors regard the investment in research and development as integral to the continuing success of the business and ensuring we provide our customers with good-quality innovative products and services,” said BSW.
BSW operates six sawmills in the UK, including ones at Fort William and Boat of Garven, near Aviemore, and one in Latvia. It also has port facilities in Inverness. The company employs 900 people in the UK and Latvia.
In March last year the company expanded its sawmill at Fort William after £37million of investment.