OUTGOING Smith Anderson executive chairman Freddie Craig oversaw a return to profit in his last full financial year at the paper packaging firm after a turnaround following the collapse of its sister paper mill into receivership in 2006.

Mr Craig retired as chairman last week prompting a reshuffle that saw Ed Murray, a non-executive at food firm WA Baxter and solicitors Turcan Connell, become Smith Anderson’s non-executive chairman.

Managing director Michael Longstaffe was promoted to chief executive after 15 years with the group.

Fife-based Smith Anderson recorded a 6.7% rise in turnover to £17.7 million for the 12 months to September 30. This translated into a pre-tax profit of £784,000, compared to a £33,000 loss in 2009.

Mr Longstaffe said: “Freddie led a concerted team effort which resulted in strong cost base reduction and continuation of moves into added value products, fuelled by superb innovation.”

Smith Anderson, which was founded in 1859, produces paper “grab bags” for fast-food chains, sandwich bars and coffee shops. Its largest customer is McDonald’s in the UK and Europe for whom it produces more than 800 million paper bags every year.

Mr Longstaffe said that Smith Anderson, which is based in Falkland near Cupar, Fife, is focusing on capital investment and recently installed new machinery to improve its service in the provision of pharmacy bags.

The major headwind for the company has been soaring raw material prices with some input costs rising 40% in the last 18 months. However, Mr Longstaffe said the firm had been “very aggressive” in its approach and had successfully passed most of its additional costs on to customers.

The family-owned company’s workforce fell from an average of 216 to 212 over the year.

Some 80.4% of Smith Anderson’s revenues come from the United Kingdom although overseas income rose from 11.2% to 19.6% over the year.

It has been a long march back into profit for Smith Anderson which in 2006 saw the closure of its sister paper-making operations at Leslie in Fife with the loss of 150 jobs in the face of high energy prices and pension costs.

Mr Longstaffe said: “We have a great team with a real desire to sustain the results secured over the past few years. I am confident that we will continue to grow. 150 years of innovation is a reliable strategic roadmap. I believe that next year will be bigger and better.”