WALKERS Shortbread achieved a rise in turnover from £124 million to £137m last year, although profits fell as a result of higher raw material costs, the company's latest accounts have revealed.

Jim Walker, joint managing director of the family-owned company, yesterday highlighted the fact that the workforce was currently at an all-time high of more than 1,700 as the firm gears up for the key festive period.

Accounts which have just become available from Companies House show that Walkers' operating profits, before exceptional items, dipped from £14.6m in 2012 to £13.2m in 2013.

Mr Walker highlighted the important part which the cost of butter played in determining the company's profitability.

Walkers booked an exceptional gain of £876,000 for 2013, relating to the closure of its defined benefit pension scheme to future accrual. The firm's pre-tax profits in 2013, at £14.5m, were down from £14.6m in 2012.

These profits are stated after charging directors' emoluments of £3.035m in 2013, up slightly from £2.995m in the previous year.

The emoluments of the highest-paid director dipped from £980,000 in 2012 to £944,000 last year.

The firms states, in its accounts for 2013, that interim dividends of £4.1m have been paid on its 'A' Ordinary shares. Mr Walker confirmed these dividends had been paid to family members who own the business. The directors did not propose a final dividend.

In its accounts, Walkers highlights its "significant contribution" to the Moray economy, in terms of the scale of its workforce. Walkers has four sites at Aberlour, and another two factories in Elgin.

Mr Walker said: "We are employing more than we ever employed. It is a record at this moment, just because we are busy in the run-up to Christmas and we had a busy year too."

The company, in its annual report, notes that profit margins earned on its upmarket Walkers brand are much greater than those made on private-label shortbread produced for UK retailers.

The Walkers brand accounts for all of the company's export business. Exports made up more than 42 per cent of Walkers' overall sales in 2013, up more than one percentage point on 2012.

Exports climbed from £51m to £58.1m.

Mr Walker said quality UK food retailers accounted for a "substantial proportion" of the firm's sales in the domestic marketplace.

He noted that the rise of discounters in the food retail sector was making life more challenging for supermarkets. Mr Walker added that suppliers to the supermarkets were facing the same challenging times.

He expects this competitive environment to continue.

He said: "I think that is just the way things are going to go."

Asked about the cost of commodities, notably butter, Mr Walker replied: "Some commodity prices have settled a little over the last few months, and it is looking better for next year."

However, he added: "They are above where they were two or three years ago."

He described 2014 as "quite challenging", citing fierce competition among major retailers.

Asked whether turnover this year was likely to be higher than in 2013, he replied: "If we are up, it won't be much."

However, he highlighted the 10.9 per cent growth in 2013. Walkers notes challenges arising from sterling's strength. But the company considers itself well placed to meet challenges relating to the economic environment, food price inflation, competition and a stronger pound, citing its enduring customer relationships and quality of its products.