The group made a pre-tax profit of 5.6m compared to a loss of 3m the previous year. Turnover was up 500,000 to 134.5m.

During the year Tullis Russell reduced its net debt by 7.2m to 4.9m, and made 6.1m of capital investment, which was above depreciation levels.

Chief executive Fred Bowden said the group had benefited from weak pulp prices, although that trend had reversed in the last couple of months.

The firms restructuring, where it laid off 100 staff and shut down one of its five papermaking machines, had also cut costs. Operating profits were 4.8m compared to 100,000 the previous year.

Tullis Russell made 1.73m from the sale of land at its Markinch site for housing development.

The group now derives 55% of sales from exports, the bulk of which comes from Europe, so the strengthening of the euro has helped its performance.

Bowden said it would continue to invest in new, more efficient equipment that would help it to offset increasing raw material costs.

Story by Gordon Carson