US consumer goods group Lancaster Colony has expressed confidence about its growth prospects despite a 7% drop in annual earnings in the last 12 months.

For the fiscal year ended 30 June, the company's net income totaled US$106.4m, or $3.84 per diluted share, which was down 7.4% on the year. Operating income dropped 15.6% to $147m.

Lancaster Colony pointed to "significantly" higher material costs and continuing economic weakness in the US.

However, its top line improved over the year, with net sales increasing 3% to $1.09bn. Sales in both the company's speciality foods and glassware and candles divisions rose.

Lancaster Colony did see its fourth-quarter net income, rising from $22.8m, or $0.81 per diluted share, last year to $29.3m, or $1.07 per diluted share. Operating income was lower, down 12.9% to $30.6m. Net sales increased 3% to $256m.

Chairman and CEO John Gerlach Jr said the balance sheet remains strong, with no debt outstanding and over $132m in cash and equivalents.

He added: "We remain well-positioned to support future growth given the strength of our market positions and a solid and flexible balance sheet."