A FLAVOURS and fragrances firm is enjoying the sweet smell of success after its profits soared by 26%.

Bury St Edmunds-based Treatt plc is celebrating the festive season early after seeing its profits rise by �1million to �4.5m before tax.

The firm, which employs 155 staff at the Bury plant, and a further 65 in America, now exports to 92 countries, including China and India, which mainly buy the firm’s flavourings products. Managing director Hugo Bovill paid tribute to his staff, having recently returned from a six month sabbatical after being with the company for 34 years.

“I was away, and they have done very well without me,” he said.

“We are a very small global business . We are headquartered in Bury and we are very pleased to be there.”

He put their recent success down to “sticking to what we know” and general demand for the firm’s products across developing countries.

In a preliminary statement for the year ended September 30, chairman James Grace, said the �63.3m turnover company, which supplies conventional, organic and fair trade ingredients to the flavour, fragrance and cosmetics industries, had enjoyed “good growth.”

Despite a weakening demand towards the end of 2009 financial year, and a continuation of this trend in the first quarter of the 2010 year, in January, demand began to recover.

“Sales of the group’s products rose sharply across the broad range of new and existing customers, reaching record levels in terms of both volumes and value in the third quarter,” he said.

“The final quarter of the year was significantly stronger than the corresponding period last year.”

The value of orange oil products, which represent 17% of group revenue, rose by 12% during the year, although volumes were unchanged. By the end of the financial year, prices began to reach all-time highs. The US dollar to sterling exchange rate had “a broadly neutral effect”, he said.

The Group’s main UK operating business, R C Treatt, enjoyed “another strong performance” and a significantly improved performance by Treatt USA, while its organic and fair trade business, Earthoil, continued to make progress although this was hampered by its loss-making South African subsidiary, which was disposed of during the year, he said.

“The Board is confident of the potential of Earthoil, however it is now apparent that the development of Earthoil has taken longer than originally anticipated,” he said.

“Although the financial year began slowly for R C Treatt, in part due to the timing of major customer deliveries, as prices began to firm the levels of activity both in terms of value and the number of transactions increased rapidly and reached record levels in the third quarter.”

Earthoil results showed some progress in 2010, with sales growth of 9%. However, Earthoil’s South African subsidiary continued to underperform and was bought out by its management.

Mr Grace said it was difficult to assess the prospects for the firm this year.

“To fully set out the prospects for the current year is not easy. The most significant raw material purchased by the group is orange oil, which is then processed by the group with the resultant products being sold at prices which reflect raw material costs. “Over the last 30 years the price of orange oil has fallen to as low as 0.40 US dollars a kg (in 1983) and peaked at 5 US dollars a kg (in 1995),” he said.

“The new financial year has started very well with both sales and margins significantly up on the same period last year for all three group businesses, R.C. Treatt, Treatt USA and Earthoil. Indeed Treatt USA achieved a record level of profit in October. The next 12 months could be somewhat tumultuous for the group as raw material and product prices reach their peak with a significant risk that prices, in particular orange oil, could then fall sharply resulting in potentially large stock losses. “However, the group expects to continue to see significant sales growth in the Far East and many other parts of the world,” he said.