Baxters cooks up a profit surge and pay rise for boss

GROWTH in international sales has kept profits on the boil at Baxters, the iconic Scottish soup and jam maker, and triggered a pay rise for boss Audrey Baxter.

Pre-tax profits rose by 34 per cent in the year to 29 May to 6.7 million, according to accounts filed at Companies House.

The increase in profits lead to a 33 per cent jump in the renumeration package for the highest-paid director - assumed to be executive chairman Audrey Baxter - who pocketed 642,000 in pay and 84,000 in pension benefits. Those figures compared with 483,000 and 85,000 in 2009.

Baxters said it is considering a number of "attractive options" and expects to make both an acquisition and a disposal in the current financial year, neither of which will be in the UK.

Baxter herself is currently in Australia, where the group has already bought two firms.

Turnover at the Fochabers-based company rose from 124m to 129m last year, with all of the 5m rise coming from the group's international businesses in Australia and Canada.

But the gross profit slipped from 47.7m to 46.6m despite efforts to raise the margin.

Instead, the rise in pre-tax profits came from "operational efficiencies" - including investment in new technology - which brought administrative costs down from 27m to 25.2m.

Writing in the directors' report, company secretary Peter McLuckie said: "The international food manufacturing sector is surviving rather than thriving and this reflects downward pressure on margins. Baxters is not immune to this and we have worked hard during this year - with suppliers and customers - but have failed to enhance the group's gross margin."

McLuckie blamed foreign exchange rate fluctuations for the rise in the group's net debt - up from 21.3m to 22.3m - which came despite borrowing repayments continuing on schedule.

He said the company was exploring options to "manage or mitigate" such foreign exchange rate movements. McLuckie gave limited details of a review of the group's retail division. In October, the company closed its restaurant at the Ocean Terminal shopping centre in Edinburgh, but retained its shop on the same site.

Baxters' other shops are at its head office in Moray, at Blackford in Perthshire, at Kelty in Fife and at Selkirk in the Borders.

The accounts for Baxters Food Group also showed charitable donations jumped from 4,546 in 2009 to 60,593 last year.A final dividend of 1.5m was proposed, matching 2009's pay out.

In past years, the surplus cash has been given to the Baxters Foundation, which supports charities in the North-east and beyond, but no details were given in the latest accounts and the company was unavailable for comment yesterday.

McLuckie also hailed the success of an extension to its condiments and chutneys ranges, which he said had been well-received by customers, and promised soups in microwaveable bowls for the UK market during the current financial year.

Other planned range extensions include more soups for the Canadian market and "pestos, chutneys and dips" for Australia.

The accounts also revealed that Baxters made a "modest acquisition" in 2010, splashing out nearly 2.9m in February for Andrews Food Distributors, an Australian business that returned a profit of 341,000 in 2008-9.

Baxters began life as a grocery shop in Fochabers in 1868. George Baxter, 92 - who handed control of the firm in 1992 to his daughter, Audrey - was made a commander of the Order of the British Empire (CBE) in the New Year honours list in recognition of his charity work and for growing the business internationally.