CORK-based Carbery milk products has reported pre-tax profits of £4.45 million for 1996, an increase of 8 per cent on the previous year.

The good results go completely against the trend of falling profits in the sector.

Carbery said its improved results were mainly because of its success in targeting further growth in value-added opportunities for its products, mostly in its food ingredients division.

The company managed to improve its operating margin very slightly - 0.4 per cent to 4.6 per cent - on a turnover of £94.3 million. Turnover was down 1.8 per cent, compared to 1995.

Carbery chief executive, Mr Dan MacSweeney, said yesterday that the company was quite happy with its results, given that milk prices were very strong last year.

Last year, Carbery invested £2.8 million in new technology in its food ingredients division which performed well last year. "Our strategy is to diversify," said Mr MacSweeney.

However, he lb recast that the company would face another difficult year. Dairy prices were quite weak, he said, and the UK markets would become very competitive, especially in the second half of the year. "All the markets for butter, casein, skim and powder are quite weak," he said, "and have been compounded by the pound's relative strength to not just sterling but other EU currencies."

The company, which is owned by the four West Cork dairy cooperatives, Bandon, Barryroe, Drinagh and Lisavaird has 2,200 milk suppliers and 160 employees. Its milk poll is 320 million litres.

Mr MacSweeney said the company was looking at acquisitions, abroad and there were always opportunities to add value, either through acquisitions or joint ventures. He said the proposed Avonmore/Waterford mergers would not affect Carbery directly,, but it would set a trend in the industry

"There is a perceived trend of mergers in the dairy industry, but this would be the first substantial one, he said.

The company grew its mozzarella cheese output last year and is now producing more than 5,0O0 tonnes per annum. It says it is well-established in the domestic and European pizza industry as a major supplier.

The company said that although cheddar prices continued to weaken throughout 1996, prices for the first half year were firmer than expected and prices in the mature end of the cheddar market remained firm throughout the year.

Carbery said it has been addressing its earlier dependency on cheddar for a number of years and has also introduced a low- and reduced-fat cheese product range. Last summer, the company introduced a new cheese - Dubliner Irish Cheese. Its key markets are Ireland, Britain and Belgium. The company said it was confident that the investment now being made would bear fruit "in the increasingly competitive years expected post-2000".

Carbery has also expanded its alcohol product range following the installation of an alcohol drying plant in 1993. In addition to the beverage market, which Carbery has always served, the company now also supplies the pharmaceutical, flavour extraction and printing sectors.