The weak US dollar has hit the interim profits of flavours and fragrances manufacturer and supplier Treatt plc, which yesterday announced an increase in overall sales on the back of a strong second quarter.

The weak US dollar has hit the interim profits of flavours and fragrances manufacturer and supplier Treatt plc, which yesterday announced an increase in overall sales on the back of a strong second quarter.

The company - whose UK subsidiary RC Treatt is based in Bury St Edmunds - reported a rise in group revenues of

11% to £19.2 million for the six months to 31 March 2007, up from £17.3 million for the same period last year.

Pre-tax profits, however, were down 11% to £1.4 million, a reduction of almost half a million from 2006.

The highlight of the period was the £2.6 million acquisition of a 50% stake in Earthoil, a supplier of organic and ethically-traded essential and vegetable oils. Treatt said the organic market represented a new area of high growth potential for the company.

RC Treatt grew sales by 16% in the first half despite the weaker US dollar significantly affecting margins, the company said. Performance in the second quarter of the period was markedly better, with sales and contribution more than double than in the first quarter. January and March were record months for the UK subsidiary.

Across the group, sales of aroma chemicals and the company's Treattarome natural distillates continued to perform well. During the period orange oil prices were stable, though well above historic prices, while other flavour and fragrance raw material prices increased as energy costs remained high.

Treatt predicts more of the same for the rest of the financial year, with sales continuing to exceed last year's levels but margins remaining under pressure. Although the order books are currently 20% higher than a year ago, the company said it was too early to confirm whether full year profits would meet the market expectation of £3.3 million.

“After a slow start to the financial year, the Group recovered strongly in the second quarter with sales up by 40% over Q1 and contribution increasing by 50%,” said Edward Dawnay, chairman of Treatt plc.

“The Group's UK subsidiary has continued to perform well, whilst in the US there has been continued investment in new product innovation and development. The acquisition of 50% of Earthoil is an exciting development for the Group which is expected to open up significant new opportunities for growth.”