Scotland's food sector flagship Baxters is to create 125 new jobs, most of them on Speyside, as it integrates its new acquisition, Fray Bentos, and moves production from Suffolk.

Chairwoman Audrey Baxter said yesterday the deal had been completed six weeks ago and the new production line at Fochabers would be ready to run by November. "Straight away we are quite confident we require about 125 people, a mixture of operatives and other skill sets," Ms Baxter said. "We will be investing in our marketing team and our sales division."

She added that growth by further acquisition was still on the cards. "It is an interesting economic climate we are in at the moment, and whilst it is very difficult to grow your organic business, there are some good opportunities out there if you have got the strength of balance sheet, the capability of management team, and the willingness to drive on."

On her banking support from Lloyds, Ms Baxter told The Herald two years ago that "despite the crisis of last year they have allowed me to have a war chest".

But after an acquisition in Canada and two in Australia, the 50-year-old grand-daughter of the company's founder has turned her attention to the UK in grabbing the iconic Fray Bentos, which will add £35m, or nearly 30%, to turnover.

"It is not a new factory, it is a refurbishment of a facility we have which means we can now fully utilise it," Ms Baxter said.

"From a heritage point of view it's a good acquisition for Baxters, but it requires us to reorganise our business and bring in wider skills."

Baxters was unveiling a third successive year of earnings growth, with pre-tax profit up from £6.7m to £7.1m, despite the challenging trading climate. Turnover, however, hit a road block after years of progress, falling by £4.2m to £125.8m.

Ms Baxter said: "These figures reflect a solid financial performance in a tough economic environment. We have operated in economic uncertainty for the last two years and we believe this will continue well into the next two years and beyond."

Four years ago, Baxters saw profits plunge to £235,000 as it wrestled with a £3.5m exceptional cost of cleaning up the Canadian acquisition, alongside other cost pressures. Last year's annual report said that in tough international conditions the company had "failed to enhance gross margin", with growth coming entirely overseas. Ms Baxter said the latest profit improvement had come from "cost efficiencies" but not by cutting staff, with total staff numbers at about 950, including more than 500 on Speyside.

She said: "The volatility in demand, cost of operating and uncertainty of supply, make the planning and implementation of good practice in a manufacturing company very challenging. Our strategy is to focus on our core strengths, targeting markets well suited to our product portfolio."

She said the fall in turnover was due to the UK market, where "the practice of low-margin promotional activity shows no sign of easing". Overseas operations had seen a double-digit sales rise. Ms Baxter added: "We continue to invest in developing innovative new products. We have significantly increased our marketing expenditure to promote these products and our core range."

But the Baxters retail outlets were said by the group to be "not immune to the poor consumer demand on the high street evident throughout the UK, and further investment is unlikely".

Ms Baxter said: "Retail was never a big growth strategy for us...our shops, like every other high street shop, are under some pressure, however that doesn't mean to say we are going to contract our retail operations."