Mackie's of Scotland says rising costs could hit profits
Ice cream-maker Mackie's of Scotland has warned that a significant increase in the cost of ingredients could hit profits this year.
The Aberdeenshire-based company said the rising cost of cream and sugar had put pressure on margins.
However, it added it still expected growth to come from the expansion of existing products and the addition of new ice cream flavours.
The warning came as it announced its results for the year to 31 May 2016.
Turnover rose by £800,000 to £12.2m, although pre-tax profits fell from £1.82m to just under £1.5m.
Mackie's said revenues had been boosted by major contracts for its chocolate bar range, as well as a market shift towards premium ice cream.
The company, which started making ice cream 30 years ago, launched its first chocolate bars in 2014. In the following year it built a dedicated £600,000 chocolate factory at its base at Westertown Farm, Aberdeenshire.
Finance director Gerry Stephens said: "Contracts with Co-op, Tesco and Sainsbury's have ensured a 74% increase in chocolate sales which is in line with our forecasts and target to reach £4m sales in chocolate by 2020.
"The growth also means that we've been able to grow staff numbers to a total of 71 with five new jobs in production."
Ice cream sales continued to grow, with a 5% increase in turnover on the previous year.
The family firm said it now had an 8% share of the UK-wide market for all take-home premium ice cream, with more than 50% of the company's sales outside Scotland.
Exports around the globe accounted for 7% of company sales.
Mackie's said its overall costs increased slightly last year, with lower ingredient costs being offset by increases in packaging, freight and labour expenses.
The company has been investing heavily in renewable energy, having installed four wind turbines and a 1.8MW solar farm. The company is now 70% powered by its own electricity from wind, solar and biomass energy.
Managing director Mac Mackie, said: "We have made progress in every part of the business. Our 30th birthday has resulted in another profitable year.
"This has been invested in new equipment for making tubs to help cut our footprint further, the new chocolate factory and our commitment to renewable energy.
"We are confident that our programme of continued re-investment will lead to the chocolate becoming established as another of the country's favourite treats and as an attractive product for our export customers."
Mackie's is preparing for its first foray into the retail sector by opening a new ice cream parlour and coffee shop at the Marischal Square development in Aberdeen in August.