KNITWEAR producer Johnstons of Elgin is set to ramp up production after enjoying a surge in sales and creating jobs amid challenging conditions for manufacturers in recent months.

The family-owned company increased turnover to £83.5 million last year from £66.4m in the preceding period, accounts filed at Companies House show.

A survivor from the heyday of Scotland’s textiles industry, Johnstons produces clothing items ranging from cardigans to dressing gowns and home accessories such as throws. It has production facilities in Elgin in the Highlands and Hawick in the Scottish Borders.

The company, which was founded in 1797, noted it had benefited from strong demand from own label customers as well as the investment made in its own brand.

With Johnstons increasing employee numbers to help meet demand, the benefit of the firm’s sales success has been felt by the communities in which it operates. The accounts show that the average number of people employed by the firm increased to 1,105 last year, including 790 working its factories.  The company employed an average of 902 people in 2021, including 620 factory staff.

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Writing in the accounts, directors said the outlook for the current year is positive.

“We expect further growth in revenue due to a strong order book with private label partners as well as increased investment in our own brand,” they wrote.

“We are looking at opportunities to increase production capacity to meet the increased demand.”

However, the directors noted that the rapid growth in sales has posed some challenges on the efficiency front.

They wrote: “We have rapidly recruited to levels beyond the pre-Covid headcount and are developing skills within this growing workforce. This has impacted our margins which were slightly below last year at 26.9% against 28.5%.”

They added: “The profit for the year was also impacted by cost inflation although we will seek to recover much of these cost increases through price rises.”

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A range of Scottish manufacturing firms have highlighted the impact of increases in the prices of material and energy amid the inflationary pressures generated by the recovery from the pandemic and Russia’s war on Ukraine. Retailers have been impacted by cuts in spending made by consumers in response to the rise in the inflation rate.

Led by chief executive Chris Gaffney, Johnstons of Elgin made £3.3m profit before tax in 2022, against £3.9m in the preceding year.

The company maintained total annual dividend payouts at around £0.5m.