CARR'S Milling Industries says the building of a new £17 million flour mill in Kirkcaldy is progressing well.

The mill, the first to be built in Scotland in more than three decades, will still be run under the long established Hutchisons brand and is on course to be commissioned by September this year.

Carlisle-based Carr's said its three flour mills – in Essex and Cumbria as well as Fife – had performed well even though the UK wheat harvest was the lowest quality since records began.

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The paucity of the UK harvest has meant a reliance on imported wheat from Germany and Carr's said the investment it made to reopen the port at Kirkcaldy two years ago was paying off.

The company warned that wheat prices remained volatile but said its sales volumes and margins were in line with expectations, in the 18 weeks to January 5.

The Carr's agricultural division – which includes animal nutrition business Scotmin – had a "strong" trading period, particularly in animal feed in the UK and United States of America.

In fuel, which includes Johnstone Wallace Fuels in Dumfries, volumes and profits both increased.

The engineering division was also said to have traded strongly with German arm Wälischmiller continuing to run at full capacity, although the first phase of a new factory at Markdorf has opened.

Fabrication business Bendalls is supplying equipment for a floating production and storage platform being built by Hyundai for BP.

Nuclear and chemical industry supplier Carrs MSM is benefiting from higher orders from the Sellafield site.

In a note, Investec analyst Nicola Mallard said: "Given the group profitability is biased [towards the first half], this strong start is encouraging for the full year outlook."