StockMarketWire.com - Active Energy Group says production and shipping levels in the first six months were broadly in line with management expectations, and at 103,733 tonnes showed a considerable uplift over the corresponding period in 2014 (61,185 tonnes).

As a result, the board anticipates that the group's first half results, which are expected to be announced by mid-September, will also broadly be in line with its expectations.

But it says market pressures and production issues - both now resolved - have affected the outlook for the second half of the year. As reported on 10 July, the Ukrainian parliament recently passed a law banning the export of unprocessed wood from the country effective from November 2015, which led to a surge in log demand in June and July, reflecting last-ditch buying efforts by log traders before the ban, which directly affects them, comes into effect.

Allied to a further increase in demand for Ukrainian timber caused by the earlier Bulgarian government ban on log exports (which came into force in March), this resulted in a short-term but significant increase in local timber market prices.

Although prices have now returned to pre-spike levels, these two factors will negatively impact upon trading margins in this area of the group's business in the first two months of H2:2015.

Chief executive Richard Spinks said: "Whilst raw material market conditions and recent production issues will inevitably impact upon the profitability of the Group's Ukrainian operations in the second half of 2015, my co-Directors and I remain very optimistic about the long-term prospects for this area of AEG's business.

"Demand from the Turkish MDF manufacturing sector, which is the largest in Europe, continues to grow, and the Group has in the past three years established an excellent reputation for the quality, speed and cost-effectiveness of its Black Sea wood chip supply route. Once our new production facilities are fully operational we will be in an even stronger position to satisfy our existing customers requirements and expand upon our already considerable market share." At 9:00am: [LON:AEG] Active Energy Group share price was -1p at 5.25p



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