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LONDON (Alliance News) - Active Energy Group PLC on Monday said it has won two high-volume wood-chip supply contracts for 2015, will expand its Ukraine-based production capacity, and has introduced a new wood chip product line, sending shares in the company higher at the open.
Active Energy said it has signed two new supply contracts with Yildiz Entegre, a leading MDF maker in Turkey. Under the deals, Active Energy will deliver up to 300,000 metric tonnes of hardwood wood chip and a further 300,000 metric tonnes of its new line of softwood wood chip.
The deliveries, due to take place in 2015, will generate revenue for Active Energy of USD68 million, with a gross profit on the contract expected to be around USD12 million.
Active Energy said it has entered into talks with other Turkish MDF manufacturers and is confident this will translate into further contract wins in the near future.
The group also has agreed a new deal with the Ukrainian State Forest Resources Agency, its long-term partner, to secure further raw material supplies to meet the demands of the new contracts. It said new high-volume softwood chipping machinery for the Ukraine production site will be operational in May 2015, doubling its total Ukraine production capacity.
The group also said it is to launch a new product line later in 2015 after starting manufacturing of softwood wood chip from pine logs.
"We are all extremely proud at having secured these new supply contracts with one of the group's largest clients, which confirm our coming of age as a business and the strength of our position in our core market," said Active Energy Chief Executive Officer Richard Spinks.
Shares in the group jumped on the contracts, rising 42% to 4.45 pence in early trade to be the best performer in the AIM All-Share.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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