UK snack maker Glisten has remained upbeat on its outlook for the full-year, despite posting half-year profits that were down by about one-third.

For the six-months to 31 December, the group said this morning (23 March) profit before tax and adjusted items sank to GBP2m (US$2.9m), down from GBP3.3m for the comparable period of last year.

However, Glisten said that turnover rose to GBP35.4m in its first half, up from GBP33.5m for the comparable period of last year.

“Margins suffered for a number of reasons,” Glisten CFO Rob Davies told just-food this afternoon.

“Whilst total and like-for-like sales were up… we had the full-year impact of acquisitions in the half. Volumes were down slightly, which depressed margins. We have also seen lumpy demand on a week-by-week basis,” he said.

Davies said that while Glisten has a relatively high level of debt, the company does not view this as a concern because of its strong cash-flow generation.

Net debt rose from GBP25.1m to GBP27.4 in the period, due to the payment of GBP3.25m in deferred consideration from the Dormen acquisition.

“We have always had high levels of borrowings… and we have always paid that down. We now expect that [level of debt] to fall over the next year or so,” he revealed.

In a note to investors this morning, analysts at KBC Peel Hunt wrote that Glisten still has “comfortable headroom” in its loan agreements.

“We are expecting the company to generate cash in H2 and next year, despite the final GBP1.25m of deferred payments. There continues to be comfortable headroom compared to the facility of GBP31.9m as well as the covenants. The majority of the facility runs to June 2012,” KBC analysts said.

KBC upgraded Glisten to buy, predicting a stronger second-half from the snack-maker.

“This is expected to be driven by the launch of price-fighting ranges, which have started well, and further growth in exports (+41% in H1) as well as the H2 weighting bias. This should more than counteract weakness in the confectionery division, which is being impacted by greater price promotions from branded competitors as well as declining sales in the independent retailer channel,” the analysts predicted.

Glisten recently introduced a new line of 99 pence snacks in order to shore up demand as UK consumers become increasingly concerned over price.

The company said that it expected sales of its low-price line to see it through the recession, when demand for healthy snacks is expected to return.

“Trading is not easy, but the company has responded to the changing environment and the new product lines are showing strong growth,” KBC noted.