Dairy price inflation poses a “serious threat” to profit margins and volumes, cheese supplier Bradbury & Son has warned.

The warning came as the company – which supplies the Go Dutch, Monterey Jack 1840 and Hawkes Bay brands to the mults – reported a 129.3% upsurge in pre-tax profits to £506,476 for the year to 30 April, against a 1.7% rise in turnover, to £70.6m.

Despite that, the directors predicted the squeeze on customer incomes would mean lower growth in the coming year. “Two Britains are emerging, with those seeking premium and those driving budget growth,” they said.

However, the company was confident it could manage inflation through internal cost reduction, the directors added. A new packing facility, opened in October 2010, was also a growing contributor to weekly sales growth.