Macphie of Glenbervie, the family-owned food ingredients company, is investing £3 million at its sites in Aberdeenshire and South Lanarkshire to maintain profitability and employment through continuing innovation.
The 80-year-old business lifted operating profit on continuing operations by 14% to £2.5m in its financial year to March 2013, according to accounts just lodged at Companies House.
Pre-tax profit was down from £2.23m to £2.08m, but employment was steady at just under 250, including 50 at its site in Uddingston, South Lanarkshire, complementing the 200 at its head office near Stonehaven.
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Raymond Howitt, finance director, said: "From an underlying viewpoint we are satisfied with the results."
He said Macphie had grown its revenues so far in the current financial year, but the benefit had been offset by the steep price rises in dairy ingredients following the wet spring and dry summer.
The last four or five years had seen similar spikes in the cost of critical raw materials, he added. "It was butter this year - the one thing that is constant is volatility, but we are as proactive as we can be in managing it."
Macphie supplies what it calls the "vital ingredient" to bakers, food manufacturers and food-service companies.
Its products include ready-to-use culinary sweet and savoury sauces, fruit coulis for desserts, bakery mixes and icings, and it has recently embarked on a new venture producing own-brand desserts for delis and other specialist retailers.
Mr Howitt said the business had built up a very wide product range across its three key sectors and in the past year had "taken some commercial decisions to look at the under-performing products".
The company's traditional bakery sector still offered some growth opportunities, he said, amid continuing consolidation of competitors and customers.
But the bigger growth potential was in food service and in manufacturing, where Macphie tended to be a "component supplier", perhaps contributing the sauce to a ready meal.
"People still want luxury, but they also want healthy eating and (low) cost," Mr Howitt observed.
"In more austere times they are still spending on food but being more selective. We are always trying to balance innovation with indulgence, health and cost, that has always been the holy grail for us."
Macphie's new own brand range has kicked off with desserts such as panacotta and crème brulee, and Mr Howitt said the business had shown "significant growth" in the past year.
He said it would not expand beyond a small percentage of group turnover, but nevertheless the group was busy developing it.
He said: "Once a product comes out, you are always looking at the next product."
Macphie's accounts show that debt of £1.2m in 2010-11 and £391,000 in 2011-12 was turned into positive cash of £814,000 last year.
Mr Howitt said that was prior to the ongoing £3m capital investment programme under way to enhance facilities at both its sites.
He also confirmed the company was not thinking about acquisitions or new ventures at this moment in time.
He added: "Our immediate focus is more about innovating around the products that we already have."
On the company's financial health, he commented: "This is a truly independent family business and will remain so."
Alastair Macphie, chief executive and 59% owner of the company, received the lion's share of a £366,674 dividend payout last year, up from the previous year's £278,865. The highest-paid director, assumed to be Mr Macphie, received £144,213, up from £137,899.