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LONDON (Alliance News) - Active Energy Group PLC on Wednesday said its outlook for the second half has deteriorated due to legislative changes in Ukraine and delays to the start-up of operations as its Yuzhny Port facility.
Active Energy, which makes wood fibre products for MDF manufacturing and biomass for energy power generation, said production and shipping in the first half were broadly in line with its expectations and said its first-half results should also come in mostly in line.
But the group said a recent law passed in Ukraine banning the export of unprocessed wood from the country, effective from November, which caused a surge in log demand in June and July as traders made last-ditch efforts to buy before the ban.
In addition to the increase in demand for Ukraine timber caused by a ban enacted by the Bulgarian government on log exports, this resulted in a short-term spike in local timber market prices and, though these have now returned to pre-spike levels, the surge will negatively hit trading margins for the company in the first two months of the second half.
In addition, Active Energy said its new hardwood processing equipment and new softwood production line at its Yuzhny Port facility, which had been due to start operations by the start of the second half, have been delayed, hitting production volumes.
As a result of these concerns, Active Energy now expects its full-year results to be significantly below current market forecasts.
Shares in the company dropped 22% in early trade to 4.9 pence per share, the worst performer in the AIM All-Share.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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