FLAVOUR and fragrance ingredients company Treatt yesterday announced increased annual sales and profits – but warned that earnings were coming under increasing pressure.

The Bury St Edmunds-based group, which also has a major operation in the United States, posted an 18% rise in revenue for the 12 months to September 30, up from �63.298m the previous year to �74.518m.

Operating profit, adjusted for adverse exchange rate movement, was 40% up at �6.864m, against �4.904m.

And pre-tax profit before one-off items was 42% ahead at �6.373m, up from �4.503m the previous year when the bottom-line figure was eroded by a �2.242m goodwill impairment charge.

The dividend to shareholders will rise by 11.5%, from 13.0p to 14.5p per share.

An increase in the price of orange oil, a by-product of orange juice production and the group’s most significant raw material, saw sales of orange oil products rise in value by 70% during the year, despite a 20% fall in volume.

Treatt USA led the growth, with sales rising by 49% in US dollar terms, although margins were reduced as the year progressed, and the group’s Earthoil operation returned to profit, with sales rising by 64%.

R C Treat, the group’s UK-based operation which exports to about 90 countries, achieved 4% growth in sales, to �45.3m. After nine months of good profitabilit”, the final quarter of the year saw sales slow and margins come under “signifcant pressure”.

Treatt chairman James Grace, who announced yesterday that he is to step down at the company’s annual general meeting, after completing three years in the role, said the group had performed well across its product range through the “difficult times” of the last four years but the current year was likely to be more challenging still, with profits expected to come under pressure

“However, the world continues to eat, drink and buy quality cosmetics and overall demand continues to grow in spite of economic conditions,” he said.

And he added: “As a truly independent and global business, Treatt remains well placed to take advantage of competitive opportunities and through its commitment to continuous improvement, Treatt has become a supplier of choice to many large global businesses as well as national companies.”