BAD weather and an early Easter has led to a bittersweet start to the year for one of the country's best-loved confectioners.

Lees' Foods, the famous maker of macaroon bars and meringues, has revealed an increase in pre-tax profits at the announcement of its preliminary year-end results.

The company, which is split into Lees' of Scotland, Waverley Bakery and Patiserrie UK, has seen its pre-tax profits increase by 7%and its sales increase by 5% during 2007.

But the firm's chairman and chief executive has sent out a warning to staff and shareholders that this year is going to be much tougher - with the weather and Easter the cause for the bleak outlook.

Raymond Miquel, chairman and chief executive, said: "During 2007 we had a strong first six months and the second half was affected by cost increases in raw materials, labour, power and distribution.

"We were not able to pass this cost on to our customers due to the competitive nature of our market and particularly due to the competition from suppliers in other European countries who target the major supermarkets in this country.

"Looking ahead to the first six of months of this year, ice cream cone sales at Waverley and meringue sales at Lees' have been affected by Easter being earlier than normal and poor weather conditions.

"In addition, costs have continued to rise and we are faced with ongoing pressures in the marketplace to recover these costs. This has had an inevitable effect on our first-half profits and they will be down on last year's figures.

"However, we have taken steps to counteract this situation and we expect a strong second-half performance in 2008, although we expect that results for the full year are likely to be down on last year's figures."

Pre-tax profits at Lees increased by 7%, from £672,344 in 2006 to £720,691 in 2007.

Sales increased by 5% from £14,480,270 to £15,141,404.

Basic earnings per share also rose from 20.67p to 23.29p.

It has been an exciting time for the Coatbridge-based company during the last year.

The business made its first move into the food catering sector and purchased the Rock Cake Group, supplying coffee shops, restaurants and the hotel trade with high quality bakery products.

It is a marked turnaround for Lees'.

Less than 10 years ago the company, which operates on the alternative investment market, was about to be wound up before the intervention of Mr Miquel.