Graham’s Dairies, Scotland’s largest independently owned dairy company and the seventh largest liquid milk producer in the UK, has reported record sales in 2006, the company’s thirteenth successive year of increased growth.

However, although record sales reached GBP£21.9m, pre-tax profits were down from £905,200 to £721,138.

The company said that the drop could be accounted for by higher raw material costs, which have driven up upon packaging and distribution costs.

Managing director, Robert Graham Jr, said that these increases were likely to have a lasting effect on company profits: “The year covered by these accounts has seen a 30% increase in raw material costs – particularly plastic for packaging. The global increase in crude oil prices, with the resultant effect on diesel and plastic costs, will continue to have a bearing on our financial results.”

In explaining the lower profit margin, Graham also pointed to the expense of consolidating businesses acquired during 2005.

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Nonetheless, he said that the company has “experienced another extremely good year. The company continues to expand organically and by acquisition.”