The Forfar-based firm posted a £7.7m pre-tax profit for the year to December, up 38% on the £5.6m it made in the previous year.
The growth in profits was achieved during a year when revenues fell 4% annually, to £58.3m, as the company grappled with challenges at home and overseas.
"Trading conditions were challenging at both the general economic level and within the group's specific markets," wrote directors in the company's latest annual accounts.
With products ranging from carpet yarn to roofing membranes, Don & Low was exposed to the downturn in industries such as construction and weak consumer sentiment.
The Greek-owned firm does much of its business on the continent, where fears of a possible Eurozone meltdown persisted last year.
While conditions have improved in recent months at home and in Europe, directors have prepared for continued tough times.
"Directors expect to be faced with continued economic and market issues during 2013.
"The plans, policies and procedures that are in place, however, mean that the directors are confident that the group's budgeted performance will be achieved," they wrote.
The success of the firm last year provides evidence of the ability of manufacturing firms based in Scotland to compete in fast-changing global markets.
It will be welcomed in Forfar where the company is a major employer.
The company employed an average 445 people in 2012, including 407 in manufacturing.
It employed an average 447 people in 2011, including 412 in manufacturing.
On a recent visit to the company, the Provost of Angus, Helen Oswald, said that Don & Low had been a constant and successful presence in the area for more than 200 years.
The company has its roots in linen and flax weaving.
Formerly owned by Royal Dutch Shell, the company was acquired by a Greek plastics firm, Thrace, in 1999.
Thrace appears to have benefited from its subsidiary's success in 2012 when Don & Low paid dividends totalling £8,050,000 up from £450,000 in the preceding year.
Sales in the UK increased to £34m from £33.7m. Sales to European Union countries fell to £15.6m from £18.9m. Total directors emoluments increased to £768,000 from £708,000 in the preceding year.