Oregon Timber Frame reported a near 40% rise in sales in 2010, but rising costs, particularly timber prices, pushed the company into the red.

The Selkirk-based business saw turnover increase from £8.8m in 2009 to £12.3m. However, profits of £21,000 the year before turned to a pre-tax loss of £334,000.

“This was due to an unprecedented increase in timber prices in the first half of 2010, which resulted in a severe erosion of margin,” said finance director Rod Lawson.

Oregon has gone into full production of its latest Intelligent Panel for the volume housing market. Sir Menzies Campbell MP and Liberal Democrat MSP candidate Euan Robson visited the factory to see the energy efficient panels being made.

Oregon believes the “increasing rigour” of Building Regulations on energy performance will drive more use of timber frame generally and its own systems already “meet and exceed” regulations.

Mr Lawson said the roll out of the new IP System was the culmination of many years of industry experience and R&D investment. He maintained that profitability was being being turned around.

“Costs have been more stable and margins are being rebuilt through a combination of cost cutting and selective pricing of work,” he said.

Oregon also says it remains in a strong financial position, with a balance sheet showing cash of £1m, even after the investment of £250,000 the company’s new factory in Burton upon Trent. Mr Lawson said the new plant should also boost business.