Imperial Leather soap maker PZ Cussons posted flat annual profits as it felt the impact of high oil prices on key packaging materials.
The group said the weak US dollar also contributed to operating profits falling to £53.9 million in the year to May 31, from £54.1 million last time.
However, Cussons - which is closing its Nottingham factory - said its key brands in the UK had performed well despite generally difficult market conditions in the second half.
It said the launch of a new Carex bathroom range had gone well, and added that sales were improving in the new financial year.
During the last three years, Cussons has bought the Original Source and Charles Worthington brands, which it believed had "considerable potential".
Despite the fall in operating profits, Cussons said it had a solid foundation for growth over the next few years and would focus on improving margins.
As part of this drive, the Stockport- based group recently said it was closing its Nottingham factory - with the loss of 160 jobs - and transferring production to a new base in Thailand and an existing plant in Indonesia.
The new factory should be in full production by 2007 when the Nottingham factory will close.
Cussons said: "The current weakness in the dollar and the impact of high oil prices on key packaging materials has restricted improvement in margins over the last few months, but our target remains to increase operating profits in the years ahead."
Cussons employs about 11,000 people worldwide including almost 500 people in the UK, where it also has a site in Salford.
The group operated in West Africa as PZ for nearly 100 years, until it bought Cussons in 1975. Now it sells its products across Europe, Africa and Asia.
Cussons was also affected by its operations in Russia, which produced operating losses of around £5 million and were closed earlier this year.
The group did not reveal how much of a financial impact higher packaging costs had on the business.
Within its European operations, operating profits before exceptional items fell to £ 21.2 million from £24.7 million. Profits in Africa increased to £20.8 million from £19.3 million.