Economic woes put comfort food top of the menu says Lees

LEES Foods, the iconic confectionery maker, has continued to benefit from hard-up households indulging in comfort food as half-year profits jumped 43 per cent.

The Coatbridge-based firm, whose products include macaroon bars and snowballs, booked pre-tax profits of 562,000 in the six months to 30 June as sales rose 9 per cent to 9.6 million.

Chief executive Clive Miquel, who took over from his father Raymond following a management reshuffle last year, said the company would keep an eye out for potential acquisitions to encourage further growth although he insisted the core business remained the priority.

His comments marked a turnaround from earlier this year when, at the time of its full-year results in May, the firm said it wouldn't seek to swallow up any other businesses in the short-term.

Miquel told The Scotsman yesterday: "Our priority is still to develop the core business organically but we are looking to grow the business over the coming years and if an acquisition came along that is complimentary, we will consider it."

Lees said the food sector in general continued to show resilience, with an emphasis on comfort foods. "We are an affordable luxury," Miquel said.

Despite fears over a hefty rise in raw material costs towards the end of the year, the firm said its expects both sales and pre-tax profit figures to be "in line with market expectations".

"The full impact of commodity cost increases into 2011 is not yet clear, but we will continue to focus on improving efficiency to mitigate against potential cost pressures as well as looking to develop new opportunities with both existing and new customers through new product development which remains core to the company's growth strategy," Miquel added.

Over the past 18 months, the group, which owns Lees of Scotland and ice cream cone-maker Waverley Bakery, has made in-roads into foreign markets, selling its goods to the US, Australia, France and Kuwait.

Miquel said the group has picked up further business in the Middle East - selling snowballs, teacakes and meringues - but he said the overseas side of the business was a "slow burner".

Shore Capital analyst Darren Shirley described the interim results as "strong". "Lees ended with a very healthy net cash position of 0.5m against 0.63m of debt 12 months ago," he said.

No interim dividend was proposed. Shares in Lees closed up 3.2 per cent, or 6.5p, at 211.5p.