ANNUAL profits have more than halved at Scottish Borders-based BSW Timber, which bills itself as the biggest saw-milling business in Great Britain, accounts filed with Companies House reveal.
The directors of the company, in their report on the accounts, cite a more competitive market-place and a rise in log prices as reasons why the year to March 2012 was less profitable than the prior 12 months.
Long-established BSW, which is run by award-winning entrepreneur Tony Hackney and remains under the control of members of the Brownlie family through their share-holdings, had enjoyed a surge in profits in the year to March 2011.
However, while declaring the 2012/13 financial year would again be "challenging", BSW's directors highlighted their intention to continue to invest for the future.
The accounts show that, even though BSW's turnover jumped to £180.4 million in the year to March from £162.9m in the prior 12 months, pre-tax profits fell to £6.81m from £17.2m. Operating profits dropped to £7.56m in the year to March from £18.4m in the prior 12 months.
However, pre-tax and operating profits in the latest accounts were still slightly ahead of respective figures of £6.02m and £7.13m for the year to March 2010. And BSW, which can trace its roots back to the mid-19th century, was loss-making as recently as the year to March 2009.
Mr Hackney's efforts at BSW were recognised earlier this year when he won the Scottish Entrepreneur of the Year and UK Turn-around Entrepreneur of the Year accolades in awards run by accountancy firm Ernst & Young. He took over the reins of BSW in 2008.
BSW, based at Earlston, runs six sawmills in the UK, at Fort William, Boat of Garten in Inverness-shire, Dalbeattie in Kirkcudbrightshire, Petersmuir in East Lothian, Carlisle, and at Newbridge-on-Wye in Wales, plus one on the outskirts of Riga in Latvia. It made a major expansion move in late 2009 with the acquisition of the Dalbeattie-based Howie sawmilling business.
BSW's average number of employees in the year to March climbed to 909, from 851 in the prior 12 months. Of the 909 employees, 746 are shown as working in production, with 163 in administration and management.
The accounts show directors' emoluments totalled £794,000 in the year to March, up from £733,000 in the prior 12 months. The emoluments of the highest-paid director dipped from £262,000 to £254,000.
BSW produces timber for construction, decking, fencing, pallets and packaging, cladding, landscaping, and the DIY market.
Highlighting a focus on investment, BSW's directors say in their report: "We continue to invest in processing efficiency and new products in order 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."
Commenting on trading and the outlook, they add: "(Financial year) 2011/12 was a less profitable year than 2010/11, as the market was more competitive for sales volume and log prices rose during the period. (Financial year) 2012/13 will again be a challenging year, but the company will continue its investment programme accordingly."
BSW's UK sales rose to £159.6m in the year to March, from £144m in the prior 12 months. Sales elsewhere in the European Union fell from £16.3m to £11.6m, but those to the rest of the world jumped from £2.63m to £9.27m.
No-one was available for comment yesterday at BSW's head office.