CARR'S Milling Industries has hailed the impact of its £17 million investment in a flour mill in Kirkcaldy as a major factor in a 2% rise in interim profits.

Revenue in the six months to March 1 this year actually dipped from £231.6m to £214.7m mainly as a result of lower agricultural and engineering revenue but pre-tax profits nudged upwards from £9.9m to £10.1m.

The milder UK winter weather was the main reason revenue in agriculture fell from £173.4m to £160m with lower sales of fuel, heating oil, feed and feed blocks.

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However better sales in the United States partially offset that with record sales of feed blocks as a result of the severe weather in parts of North America.

Revenue at the engineering arm of Carr's was down from £13.5m to £10m while food was up slightly at £44.8m.

Pre-tax profits in food more than doubled from £448,000 to £1.03m as the full impact of the Kirkcaldy mill, which was commissioned in September, started to come through.

Tim Davies, chief executive, said: "I am delighted that our flour mill at Kirkcaldy was commissioned on time and within budget.

"This strategic investment, in the world's most technologically advanced flour mill, is delivering a step change in the financial performance of the Food division."

The facility, which replaced an older one in Kirkcaldy, was designed by a team from Carr's working alongside Swiss engineering firm Buhler.

The new mill, which preserved the jobs of dozens of workers in the Fife town, includes a specialised sorting process to eliminate discoloured grains and reduce the likelihood of contamination.

It also features a system which can generate traceability reports within minutes of flour being milled and automated sampling and testing facilities.

Carr's said: "This important and complex project is already delivering both operational and commercial benefits.

"These benefits will continue to grow during the remainder of the financial year and the division is expected to meet its planned level of financial performance."

The Carrs Billington agricultural and pet supplies retail division said a new shop at Annan is on course to be completed by the late summer.

That arm also has Scottish sites at Selkirk, Jedburgh, Milnathort, Perth and Stirling as well as the Johnston Wallace Fuels petrol stations in south west Scotland.

The group's agricultural division recorded a pre-tax profit of almost £6.8m in the period, up from £6.27m.

Carr's said it is still exploring the possibility of opening a dedicated production facility in New Zealand.

Engineering was the only division to record a lower profit with its £1.8m coming in behind the £2.19m posted in the same period of the previous year.

Mr Davies said: "We have positioned the engineering business so that we can benefit from the uplift in delayed nuclear contracts from Sellafield, which we believe will materialise in the short-to-medium term.

"Wälischmiller in Germany is performing well and is benefitting from the significant investment in new operational facilities and equipment, with the factory move now completed."

Analylsts from Edison Investment Research kept a target of 1983p on the shares and said: "Carr's Milling Industries' performance during H114 demonstrates the success of management's sustained investment in product innovation and infrastructure and the development of international markets.

"While the mild UK winter has caused purely domestic competitors to struggle, the group was able to report a modest year-on-year improvement in profitability."

Shares in Carr's closed up 6p, or 0.36%, at 1686p.