Scottish confectionery group Lees Foods has increased its sales by almost £2m during 2011.

The Coatbridge-based firm reported an 8.9% rise in sales last year to £20.3m in its preliminary results for the year ended 31 December 2011, with pre-tax profits up 6.1% to £1.09m.

Lees of Scotland, which produces snowballs, teacakes, meringues and seasonal biscuits under the Lees brand, revealed a 33.1% decline in gross margins, which the company attributes to “significantly higher input prices”.

Clive Miquel, chief executive of Lees Foods, said: “Protecting margins, through managing the impact of considerable ingredient and packaging cost increases, continues to be our main focus. The cost increases we face in 2012 on two of our key ingredients, sugar and eggs, are significant.

“In order to meet the current challenge of rising ingredient costs, it is vitally important that we successfully introduce new products at improved margin levels to continue our profitable growth. In this regard, during 2011, we launched Lees’ mini meringue cake decorations, which take us into a new product area with our retail customers.”

Basic earnings per share increased to 31.94p for the year, in comparison to 29.28p in 2010.

The firm stated that, in the past 12 months, it was able to expand into new markets with the launch of its Lees mini meringue cake decorations.