OREGON Timber Frame has seen profits slide by more than 20 per cent as it battled rising material costs and demands for cheaper prices from clients.

The Selkirk-based company, which supplies timber frames for housebuilders such as Cala, Miller and Dawn, made pre-tax profits of £627,000 for the year ended December 31. Turnover increased by 15 per cent in Scotland but five per cent for the group as a whole, as a £3 million contract to supply social-housing builder Wates Living Space came to a close in England. That deal, which ended in August, saw Oregon supply timber frames to 300 homes.

The company, which does 90 per cent of its business in Scotland, booked revenue of £13.9 million, which remains adrift of its pre-recession peak of £19 million.

Chairman Roderick Lawson, who is the company's biggest single shareholder, said: "There have been great cost pressures from materials, and also there is still a lot of competition. Our clients always want the best price so we are squeezed a bit."

In spite of the profits fall, Oregon signalled its confidence in the housing market recovery by investing £600,000 over the year to expand its Selkirk site by 18,000 square feet. The expansion had initially been planned to take place before the recession.

The company, which is also looking to expand its factory in Warrington, can now also supply engineered joists for assembly in flooring systems. Mr Lawson conceded the downturn had been "very difficult" for the business, which now has more than 100 staff after employing an average of 82 during its last financial year. It employed as many as 120 staff and operated double shifts during the "boom times".

Mr Lawson said: "In 2005-2006 we were doing about £19 million [in] turnover. We haven't got back to those levels of turnover. It halved, basically, within a very short time.

"We had to cut back a lot, we had to make people redundant. Our salaried staff were good, they took a salary sacrifice. The directors took a sacrifice and we just went through the recession with all hatches battened down."

Mr Lawson said the company's performance was "mirroring" the general recovery in the housing market, with Oregon pencilling in growth of 10 per cent per year in line with the expectations of its clients. He credits Help to Buy scheme, which sees the government help home buyers with the cost of deposits, with being key to the recovery.

Mr Lawson noted: "It really kicked off the market at the beginning of the year, and it really gave the housebuilders a lot of confidence to build ahead."

On current trading, Mr Lawson said timber prices have stabilised after rising in the last six months, with the strength of sterling versus the Swedish Krona and the Euro helping in buying terms. The company sources its timber from Scandinavia.