Israel-based ingredients group Frutarom has seen an increase in annual underlying profits as revenue from its flavours business rose.

The company, which has plants in eight markets, including the US, the UK and Germany, said operating profit inched up to US$36.5m in 2007 from $34.3m a year earlier.

Sales reached US$368.3m, growing 28.2% on 2006, Frutarom said.

The company spent much of 2007 integrating recent acquisitions, including Belmay and Jupiter in the UK and Abaco in the US.

President and CEO Ori Yehudai said the integration had weighed on profits in 2007 but insisted that the new businesses would boost margins this year.

"The 2007 results were influenced by the acquisitions, which contributed to the growth in sales but as expected temporarily reduced profitability," Yehudai said. "It is our view that the acquisitions will contribute from the first quarter of 2008 to the continued growth trend in sales as well as to the growth of profit, while improving margins."

Yehudai added that Frutarom would look to up its prices to cover rising raw material costs.

"We will continue to act resolutely to improve margins by raising the selling prices of our products to adjust them to the ongoing rise in raw materials prices," he said.