GRAHAM'S, which describes itself as Scotland's largest independent dairy company, suffered a further sharp fall in profits in its last financial year amid "competitive pricing" by retailers and cost pressures.

The family-owned dairy company revealed yesterday that its pre-tax profits had fallen to £420,000 in the year to March 31 from £604,022 in the prior 12 months, a drop of about 30.5%.

Graham's had suffered a 42.5% fall in pre-tax profits in the year to March 2011, having made earnings of £1.05 million at this level in the 12 months to March 2010.

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However, Graham's achieved a rise in sales to £56m in the year to March 2012, from £49.6m in the prior 12 months.

It highlighted growth in sales of its spreadable butter range.

Robert Graham, managing director of Graham's and grandson of company founder Robert, said: "Though a successful, award-winning family business, Graham's has not been immune from cost pressures, including ongoing competitive pricing in the dairy category with consumers buying on promotion."

But he added: "Upward sales growth, notably in our spreadable and award-winning range of butters highlights discerning customers continue to seek out the reassurance of buying high-quality, great-tasting dairy products: precisely what is offered by our 73-year-old family dairy."

Mr Graham did not elaborate on his comments about competitive pricing.

However, major supermarket groups have slashed milk prices amid the UK economic downturn as part of their battle with rivals to draw in hard-pressed consumers. There are also frequent promotions on butter.

Mr Graham cited the impact of higher fuel and oil prices on his firm's distribution and packaging costs.

Graham's counts the major supermarket groups among its customer base, with a spokesman for the Bridge of Allan, Stirlingshire-based company noting that it supplies all major multiple retailers except Marks & Spencer. The dairy firm also supplies convenience store chains and corner shops, as well as pubs, restaurants and hotels. The family owners of the company, which employs about 380 people, are committed to maintaining its independence.

Formerly stock market-listed Robert Wiseman Dairies, in which the Wiseman family had remained heavily involved in terms of management and shareholdings, agreed in January to a £279.5m takeover by Müller of Germany.

Asked about the Graham family's view on ownership, in light of sector consolidation and the Wiseman deal, a spokesman for the independent dairy company replied: "I know the family view is very much that they remain a family business. They are very much continuing as they are, and expanding and growing and diversifying products.

"As everyone knows, the market has completely changed with Wiseman, but they are still planning to remain independent."

Mr Graham noted his company's climb up trade publication Scottish Grocer's rankings of the top Scots food and drink brands, from 14th to ninth. He also cited recent market research from Kantar showing sales volumes of the Graham's milk brand growing by 35% year-on-year in the UK market.

While flagging "wider economic uncertainty", Mr Graham highlighted continuing investment by the dairy company in its plant, brand and products.

Mulling the outlook, Mr Graham said: "We anticipate that market conditions over the next 12 months will be challenging.

"However, through continued organic sales growth and supplying a good spread of customers, including major supermarkets, hotels and independents, Graham's The Family Dairy is confident we are well placed to further consolidate and develop our presence in the sector."