The Fife-based timber specialist had invested £1.2m in new machinery at its Chorley sawmill in England and looked for opportunities in the market to expand its product range.
MGM Timber Scotland and Donaldson Timber Engineering exceeded expectations and produced market leading performances, the company said.
Group turnover was unchanged at £105m, but profit before tax rose 8.4% to £2.2m, the company said in a trading statement.
"To raise profitability by 8.4% in challenging market conditions is a particularly commendable achievement," said group executive chairman Neil Donaldson. "Our borrowings remain low and we have managed to grow net assets to £18m."
James Donaldson Timber produced a strong result for the group out of its Leven site, while the investment at Chorley significantly improved capacity and production efficiency, the company said.
"Our business made considerable progress during the year despite a combination of low housing starts and poor general construction activity," said Donaldson group managing director Scott Cairns. "All core trading companies within the Donaldson group have grown market share."
