NAIRN’S Oatcakes has hailed the success of its £6.5 million investment in a new gluten free production plant as it saw pre-tax profits climb 14 per cent.

But managing director Martyn Gray warned that as the company planned its strategy for future growth, it needed clarity on Brexit as increased production costs were “just the start” of the referendum result’s consequences.

The Edinburgh-based biscuit maker posted pre-tax profits of £2.5m as revenue grew 7.6 per cent to £27.2m in the year to the end of May.

Its new gluten-free factory opened in November, and will make its first full-year contribution next year, but director Martyn Gray said it had already “transformed the business”.

Gluten free products – which the group has been producing since 2010 – now account for about one third of all sales, and Mr Gray is confident the new facility will accelerate this.

Mr Gray said the gluten-free range was becoming an increasingly important part of the business.

“It’s roughly about a third of our business at the moment and there is potential growth going forward as well,” he said.

“The new site gives us capacity, at the old site we had no more days in the week left to produce; we had to move. But it gives us competitiveness as well, it has allowed us to introduce much more technology and automation into the site which allows us to produce quicker and more efficiently, but also a better quality [of product], which is just as important.”

The increased automation brought by the move to the new factory has led to a reduction in staff numbers, with Mr Gray saying there was a combination of redundancies and temporary staff no longer being required.

“We need less people to run the new site and that was factored into the increased costs this year,” he said.

Mr Gray said “about 20 to 25” permanent staff were made redundant and “about the same again” on temporary contracts.

But Mr Gray added: “We’re now down, we were running three shifts six days a week there and we’re now two shifts five days a week at the new site and we’re hoping to increase that as the business grows and we’ll take more and more people on as the business expands so we want to build it up again.”

A number of other staff were redeployed to the core site. In total there was a net reduction of 13 staff, to 239 employees.

Mr Gray said that while the gluten free range stood out, there had been sales increases “across the board”.

In the export market, sales reached £2m, with the gluten-free range over-indexing. He commented: “We’re looking to grow the export market more than the UK market over the next few years.”

He said the company tended to perform well in English speaking countries, highlighting America, Canada, Australasia and South Africa. He added that sales had also been strong in Cyprus and the Middle East.

“This year we’ve started developing in Europe quite successfully, particularly in The Netherlands, where we’ve got new business in the gluten free sector and we’re in larger supermarkets in The Netherlands,” he said.

Mr Gray said there remained a degree of uncertainty in the grocery sector, noting: “The heart of it is to plan and get your strategy right going forward and I think with the Brexit debate, all companies are saying the same thing, the sooner we can get some certainty on what is happening we can put plans in place to affect the change.

“We know it’s tough, we’ve seen input prices increase, that’s the first effect of Brexit we’ve seen and I’m sure there will be more to come.”

Most of the company’s ingredients, including its oats, come from the UK, but Mr Gray said: “Even if you are buying from the UK market, they still compete in the global marketplace and are affected by trends that happen in the wider market.”