UK biscuit manufacturer Walkers Shortbread has maintained the company is in good shape, despite commodity costs hitting earnings and margins last year.

Earlier this month the Scotland-basedbiscuit and cake maker reported a dip in margins and flat profits for 2011 and warned margins may weaken further.

Profit amounted to GBP8.9m (US$14.4m) for the year to the end of December 2011, unchanged from the year before, while margins dipped to 7.2% from 8.5%.

Despite this, managing director James Walker told just-food at the SIAL exhibition in Paris that while the commodity markets have proven "difficult" for the company and indeed the industry, that the company is in "good shape".

"Across the whole world ... commodity markets are difficult, the supermarkets are more competitive, but we're keeping our end up and we're managing to maintain our position."

He added: "Supermarkets are getting more and more competitive, but we're in pretty good shape. We saw a drop in margin last year but the future really depends on how commodity prices go. But we're in a strong position and more so than many other biscuit manufacturers."

Walker said the company has been affected by the increase in wheat, corn, cocoa and butter prices.

"Normally a big rise can't be sustained for too long before it eventually moves so we hope that the increases are slowing," he told just-food.

Walkers said the company also faced the challenge of having a traditional product that can be a "challenge" for innovation.

"It's always a challenge. Sadly the market is so driven by innovation and we sell a traditional product. But we do manage to innovate and we've done well. We're never in high fashion and we're never out of fashion. There's always room for a traditional product with provenance and we're selling a piece of Scottish heritage. It's all about integrity."

In March, Walkers announced plans to build a new facility in Aberlour in Scotland to boost production capacity.

Walker said construction is currently under way. "We have experienced steady growth over the last five or six years and we're now pressed for capacity," he told just-food. 

The plant will be Walker's sixth to date, all of which are located in Arberlour.