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Active Energy lands US$50mln of wood fibre orders

AIM-listed Active Energy Group is fast becoming a mover and shaker in the MDF market.
Active Energy lands US$50mln of wood fibre orders
The company is investing in new softwood capacity.

Not since the 1990s BBC DIY programme 'Changing Rooms' has MDF (medium density fibreboard) been so interesting.

For AIM-listed Active Energy Group (LON:AEG) is fast becoming a mover and shaker in the market.

Its AEG WoodFibre arm, based in Ukraine, has landed two “significant” supply contracts expected to generate revenues of US$50mln this year.

"The entire MDF industry now recognises that AEG WoodFibre is a leading force in the European wood fibre supply market that can be relied upon to consistently deliver bulk volumes of high-quality feedstock; demonstrated by our clients' willingness to support the expansion of our manufacturing facilities to include softwood production," said chief executive Richard Spinks.

The two contracts were signed last week with Yildiz Entegre, the leading MDF manufacturer in Turkey.

AEG will deliver up to 300,000 tonnes of its hardwood wood fibre product, as well as up to another 200,000 tonnes of its new softwood material. 

Additional off-take supply negotiations with other Turkish MDF manufacturers are ongoing, and the group expects to announce further contract wins over the coming months, investors were told.

"We are extremely proud of securing these new supply contracts with one of AEG WoodFibre's largest clients, which both confirms our increasingly strong market presence and our position as the largest supplier of processed wood products from Ukraine,” said CEO Spinks. 

“Credit is due to our chief operating officer Matteo Girlanda and his entire team for all their efforts."

To meet increased demand, the company is investing in a new softwood production line to augment its recently-upgraded hardwood facility at a cost of around US$750,000.

In an update to trading, AEG said the wood fibre division had recovered from a difficult period of trading mid-year.

The fourth-quarter saw it for the first time deliver three bulk cargo loads in a single month at good margins.

“Demand for wood fibre continues to exceed supply, and regional developments provide a strong indication that this will continue,” said Spinks. 

“Expanding our wood fibre product range to include softwood is further evidence of our commitment to the long-term development of this vibrant and continually-expanding area of the group's business."

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