Lees Foods has broken through the £1m pre-tax profit barrier for the first time, thanks to production efficiencies and increased business in the foodservice sector.

The firm, which owns confectionery manufacturers Lees of Scotland and Waverley Bakery saw sales increase 3% to £18.65m, and pre-tax profit, before deductions, up 22% to £1.03m for the full year to 31 December 2010.

Chief executive Clive Miquel said the sales increase was achieved across the majority of its product categories, while improved efficiencies resulted in gross margins increasing from 32% to 33.7%.

“A large part of our business continues to be with the major UK retailers, and we have successfully increased our penetration into the UK food service sector,” said Miquel.

“Our sales are developing in international markets and while this remains a small part of our overall turnover, we have made some positive inroads with listings in a number of European retailers.”

The firm announced it was going to increase its focus on developing the Lees brand, which has seen Lees Mallows Dreams launched earlier this year – the first new Lees branded product for some time.

Miquel explained that a programme of continuous investment in its plant had positively impacted on production efficiencies, and had already delivered benefits in terms of reduced raw material and packaging waste. A strategic review of its product packaging had also resulted in a “meaningful reduction” in packaging usage, it said.

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