LONDON (Alliance News) - Active Energy Group PLC shares fell on Thursday after warning its operating loss will be wider in 2015 compared to the previous year because of the investment made into its new division and due to the ongoing issues at its TimberLands division which is being hit by several delays.
Active Energy shares were down 10% to 4.75 pence per share on Thursday morning.
The timber company, which has also recently launched a biomass fuel division, warned in December that it would incur a loss for the full year in 2015, and revealed Thursday that its operating loss for the year will be wider than it was in 2014.
Active Energy's operating loss amounted to USD1.3 million in 2014, which was narrower than the USD3.5 million loss in 2013.
There was strong trading at its WoodFibre division in the final quarter of the year, but the company reiterated Thursday that it was not enough to offset losses booked from the division earlier in the year.
The WoodFibre division is the company's manufacturing unit that produces processed wood fibre to supply the Turkish MDF market. Currently, it only produces hardwood but a softwood line is being introduced this year to broaden its offering and to allow it to enter new markets and grow its orders.
Active Energy revealed Thursday that the division was shipping around 27,000 tonnes of wood per month in the fourth quarter, implying quarterly production was around 81,000 tonnes.
To put that into perspective, Active Energy shipped a total of 103,733 tonnes in the entire first half, which averages out to only 51,866 tonnes per quarter.
Back in December, the company said the WoodFibre division had traded profitably in the fourth quarter but the division was hit by losses in the third quarter caused by the price hikes seen prior to the Ukrainian unprocessed wood export ban coming into effect.
Active Energy said the WoodFibre division has continued to trade well since the start of 2016, but stated that average monthly volumes have fallen to around 23,500 tonnes from the 27,000 tonnes per month in the final quarter of 2015.
The fall is primarily because of poor weather in January, the company said, but Active Energy is still expecting production to ramp up this year as it will be introducing a new softwood production line in the second quarter of this year, which should have a significant effect on the division's operations.
Notably, the softwood production line was originally expected to be operational in the first quarter of this year.
Active Energy's TimberLands division, which handles forestry asset management and development work, is facing headwinds that are causing delays. The company said forestry operations have been pushed back "beyond" the first quarter of 2016 as it is negotiating with local settlements and facing delays through "matters related to the Alberta government," it said.
As a result, Active Energy said around USD600,000 of expenditure on the division in 2015 that it was expecting to capitalise in the year will now be charged to the profit and loss account.
The company's investments in 2015, most notably into its new biomass fuel division, will also contribute to the wider loss in 2015.
CoalSwitch is a biomass fuel that can be used to replace coal or burnt alongside coal in power plants to generate energy, but as the division is fairly new it will not be contributing any earnings for 2015. Active Energy spent USD300,000 on investment in that technology in the year, which will contribute to the wider loss that is expected.
Active Energy said, on a more positive note, its cash balance at the end of Wednesday stood over USD1.0 million, up from USD900,000 at the end of June.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Active Energy (AEG)