Ingredients firm sees profits rise

FLAVOUR and fragrance ingredients company Treatt yesterday reported increased revenues and profits “in line with expectations” despite the downturn in the global economy.

FLAVOUR and fragrance ingredients company Treatt yesterday reported increased revenues and profits “in line with expectations” despite the downturn in the global economy.

The Bury St Edmunds-based company achieved turnover of �28.309million during the six months to March 31, up 31% on the previous year's first half.

Operating profit was 27% ahead, before allowing for the impact of adverse exchange rates, and at the bottom line pre-tax profits were 6% up at �1.393million.

“Given the challenging economic climate, the group had a good result for the six months,” said Treatt chairman Edward Dawnay.


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“The first half performance was in line with expectations despite the major downturn in world economic conditions, with both sales and margins holding up well across the Treatt group.”

However, Mr Dawnay cautioned that while prices of the group's main commodities had been unaffected, in US dollar terms, during the first three months of the period, there had been a “significant” downturn in commodity prices, in both euro and dollar terms, since the start of the 2009.

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“Many citrus oil prices have declined since January, with some returning to historical norms following a period of higher prices resulting from global shortages and others falling owing to a drop-off in demand,” he said. “Prudent provisions have been taken across the group to cover stock losses.”

R C Treatt, the group's UK operating subsidiary, had a particularly good first six months as it benefitted from a strong US dollar, with 75% of its order book being dollar-based.

Aroma chemical sales continued to grow, with margins benefitting from the weaker pound, although there were fewer transactions and sales to the Middle East fell back sharply due to economic conditions in the region.

Treatt USA managed to maintain sales and margins despite both the loss of some citrus oil business and as a result of a slow-down in demand generally in the US. Losses within the Earthoil business were cut “substantially”, following a “marked improvement” in sales and margins.

The group's interim dividend is being raised by 3% to 3.7p per share.

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