FLAVOUR and fragrance ingredients group Treatt yesterday reported a strong set of annual results with sales up nearly 9% and profits down only 3.5% despite substantial one-off gains the previous year.

FLAVOUR and fragrance ingredients group Treatt yesterday reported a strong set of annual results with sales up nearly 9% and profits down only 3.5% despite substantial one-off gains the previous year.

The Bury St Edmunds-based company, which specialises in essential oils and natural extracts, said group revenue for the 12 months to September 30 was up 8.9% compared with last year at £35.41million.

Pre-tax profits came in at £3.3million, against a restated figure of £3.4milion the previous year when the company benefited from favourable price movements boosting the value of its stocks.

“The underlying performance of the group as a whole was good because, despite the absence of last year's substantial one-off stock gains on orange and grapefruit oil products, group profit before has only reduced by £0.12million,” said company chairman Edward Dawnay.

“In other words, what was a short term profit in 2005 has become underlying long-term profitability in 2006.”

R C Treatt, the group's UK business, increased its turnover by 10% to £27.5million and its profits by 9%

“Over the last two years, R C Treatt's profit before tax has increased by 64%,” said Mr Dawnay. “This growth has been broadly spread but the profits from sales of aroma and speciality chemicals has been particularly strong, underpinned by a higher petroleum price and generally increasing prices for most commodity raw materials.

“However, most of the growth in sales and profit from aromatic chemicals has arisen from an increase in the volume of orders received, resulting in sales growth of 15%.”

Treatt USA, the group's United States subsidiary, however, suffered a difficult year in the absence of 2005's gains on grapefruit oil stocks. Turnover increased by 4% but profits fell as high-margin grapefruit business was replaced by lower margin commodity sales, although Mr Dawnay said the underlying growth potential of the US business remained very strong.”

Looking ahead to the group's prospects, he added: “The outlook for 2007 is one of continuing revenue growth but we expect margins to remain under pressure.”

The dividend will rise by 10.5% to 10.5p per share.