SCOTT Timber, the Fife-based saw milling and pallet manufacturer, has signalled that brighter times lie ahead for the business after reporting operating profits for 2012 broadly in line with the previous year.

The company, a division of industrial supplies ­organisation Scott Group Investments, cited tough economic conditions as it booked an operating profit of £4.12 million for the year ended December 31, 2012, accounts which have just become available at ­Companies House show. The comparative figure for 2011 was £4.11m.

Scott Timber, which saw turnover rise to £79.8m last year from £73.8m in 2011, said conditions were notably tough in the construction sector.

The directors write in the accounts that 2012 had seen the "majority of customers, and especially those in the construction sector, operating well below what might have previously been considered to be normal activity levels".

Commenting separately on the results, group ­operations director Norman Scott said the company was "satisfied with the results in what was a very challenging year".

But he emphasised that its prospects looked brighter in its current financial year. He said this was due in part to the recovery of the UK housing market, which he described as "probably the biggest sector we supply".

Mr Scott said: "What is not in the accounts is the outlook going forward we feel is significantly improved.

"We have a lot going on in the business - we can ­definitely see the signs of recovery among some of our customers. Even in recent weeks we have seen a significant, measurable uplift in activity, so we are pretty positive looking forward now."

Mr Scott said the company retains an "open mind" on acquisitions. While past takeovers by Scott Timber have focused on other timber or pallet companies, he ­highlighted the potential for the group to grow through diversification.

He said it was "looking at a number of acquisition opportunities" for its Scott Direct division, which is focused on engineering consumables, workwear, tools, safety equipment and commercial insurance.

In their report on the company's latest accounts, the directors reveal that since year end the packaging division of Scott Timber has been transferred to its sister company, Scott Packaging.

The directors explain the move will "allow additional transparency in the reporting of the divisions and contributes to a simpler group structure".

The firm derived £8.64m in turnover from packaging in 2012, compared with £7.44m in 2011, with turnover from pallets up to £71.2m from £66.4m.

The accounts show Scott Timber employed an average number of 670 staff in 2012, up from 594 the year before.

Overall staff costs for the year rose to £14.97m, compared with £12.5m in 2011. Directors' remuneration was booked at £757,117 for the year.