Historic Forfar textile firm Don & Low saw profits fall by more than a fifth last year, newly published accounts from the group have shown.
Sales rose by £1.8 million, or 3.1%, to just above £60m during the 12 months to the end of December but pre-tax profits fell more than £1.75m to £5.9m.
A significant increase in input prices accounted for much of the reduction, according to documents filed at Companies House, with the cost of raw materials and consumables hitting margins after rising by more than £1.5m on the previous year.
The company said markets remained tough despite a continued “strong focus on safety, quality, customer service and continuous improvement initiatives”.
“Trading conditions during the year remained challenging at both the general economic level and within the group’s specific markets,” the directors’ report said.
“The factors affecting trading conditions are monitored closely by the directors and the group responds to these by detailed strategic planning, thorough budgeting, comprehensive review of the cost structure and by recovery of unavoidable cost increases.”
Overall the Greek-owned firm, which does 40% of its business outside the UK, said its directors considered the results for the year to represent a “good performance”.
With a product range which includes carpet backing, geotextiles, yarns and construction fabrics, the company has been exposed to weakness in the construction sector and the economic woes of the eurozone.
But Don & Low said it was prepared to face more difficult times to come, with “significant resources” being applied to the management of income costs.
“The directors expect to be faced with continued economic and market issues during 2014,” the strategic report said.
“The plans, policies and procedures that are in place, however, mean that the directors are confident that the group’s budgeted performance will be achieved,” the report added.
Staff numbers remained steady, with a monthly average of 445, including just above 400 in manufacturing roles.
The total wage bill rose 3.5% to £11.8m, while directors’ remuneration, including pension payments, totalled £723,000 a £57,000 reduction on the previous year.
Don & Low, which has had a presence in Angus for more than 200 years and is based on Forfar’s Glamis Road, has its roots in flax and linen weaving.
New developments include a range of banner and advertising materials, launched in April, and products suited to the furniture and bedding, transport, and leisure industries.
In February it hailed the approval of its non-woven geotextile range for use in track construction and renewal by railway infrastructure operator Network Rail.
Formerly owned by Shell, the company was acquired by Athens-headquartered plastics group Thrace in 1999.
It is now part of a global group of 20 operating companies also boasting production facilities in the USA, Turkey, Bulgaria and Romania and a sales network which extends to 80 countries worldwide.