CARR'S Milling, the agriculture, food and engineering group, lifted their pre-tax profit by 7.8 per cent last year to £16.6million, on revenue down 8.4 per cent to £429million, after boosting its presence in Scotland with substantial investment.

Carlisle-based Carr's opened a new flour mill at Kirkcaldy in August last year after a £17m investment in the world's most technologically advanced mill.

It enabled Carr's to almost quadruple food division profit from £600,000 to £2.3m, on revenue down by 7.5 per cent to £87m due to lower wheat prices.

Chief executive Tim Davies said: "The benefits of the new mill have been delivered from improved operational efficiency, and the commercial benefits derived from increased customer confidence in our ability to produce high quality flour, milled to the highest standards of product integrity."

He added: "We expect to deliver further increased financial benefits from the new mill during the next financial year."

Designed by a team from Carr's working alongside Swiss engineering firm Buhler, the mill replaced an older one in Kirkcaldy and preserved the jobs of dozens of workers. It includes processes to eliminate discoloured grains, reduce the risk of contamination, and generate traceability reports within minutes of flour being milled.

Mr Davies warned that in agriculture, "weak farmgate milk prices will undoubtedly have an adverse effect on the farming community".

He said last year's mild winter had a mixed effect on Carr's customers. Farmers were able to feed good quality home grown forage and reduce costs of production, but there was an adverse impact on sales of compound or blended feed, feed blocks and fuel.

"However, one of our key strengths is our geographic diversity," said Mr Davies. "Sales of feed blocks in the USA increased as a result of one of the coldest winters on record. In addition, livestock farmers were in a position where bought-in feed and supplementary feeding regimes were vital to maintain livestock performance."

Carr's continues to invest in new production capacity in the US and develop sales of patented products in overseas markets.

The division saw revenue fall 7.5 per cent to £315m, but there was a 4.3 per cent rise in profit to £12.1m when including associate and joint ventures, such as the Carrs Billington retail business which has Country Stores retail offshoots at Annan, Selkirk, Jedburgh, Milnathort, Perth and Stirling, and the Johnston Wallace Fuels petrol stations in south west Scotland.

In April this year, Carr's expanded its engineering arm with the acquisition of Tyneside-based Chirton, a specialist supplier to the oil and gas industry, complementing the group's Carlisle-based Bendalls fabrication business. The division saw falls in both revenue, down almost 20 per cent to £26.9m, and profit which slid by 11.7 per cent to £3.7m, largely due to a contract delay. Debt rose by £2.5m to £24.6m, after capital expenditure of £8m. The final dividend is up three per cent to 17p (total up 2p at 34p), and a ten for one share split is proposed in January.

Analyst Nicola Mallard at Investec Securities said the group's geographic and operational diversity had enabled it to counter different weather patterns and offset some short term challenges for engineering. She said the Kirkcaldy investment had "proved a real success".

Chairman Chris Holmes said the current year would be "tough for our UK farming community with pressure on farmgate milk prices expected to remain". But Carrs had made a good start to the year, and he remained "excited about the long-term growth opportunities for the business".