MACNAUGHTON Holdings, the kilts to fabrics group from UK, has seen sales fall by around 50 per cent in Russia following the slump in the value of the Rouble amid political uncertainty and the plunge in the crude price.

Russia had been Macnaughton's fastest growing export market. Export sales fell by around 6 per cent in the latest financial year, to £1.7m from £1.8m in the U.S.

But with favoring conditions in North America, its biggest overseas market and rising hometown sales increased to £2.7m from £2.4m.the group has decided to increase capacity after recording strong growth in profits amid booming demand in the UK although it has faced challenges in export markets such as Russia.

The UK kilts to fabrics group, Machnaughton Holdings is run by Blair Macnaughton, who was recognised for his services to kilt making by the Queen last week, the group posted pre-tax profit of £265,000 for the year to January. This was up 11 per cent from the £238,000 it made in the preceding period.

Run by the latest accounts for the group, filed at Companies House, show the group increased turnover by four per cent annually to £4.4m.Sales in the UK rose 12 per cent, driven by what Mr Macnaughton described as very strong demand.

He noted the firm enjoyed a big one-off boost from the Glasgow 2014 Commonwealth Games. The company was contracted to make the kilts worn by members of the Scotland team and by medal-bearers. It sold around 400 kilts for the games.

However, demand for kilts in the UK remains strong. Mr Macnaughton said the company benefits from stocking around 1,000 tartans meaning it can respond quickly to orders.

Macnaughton makes kilts in Paisley, using fabric it produces in Keith.

The company has been increasing weaving capacity at the Aberdeenshire plant to meet expected demand. Mr Macnaughton noted sales of fabrics for interiors have been going well.The company, which provides valuable employment in the areas it has operations, is looking to hire additional skilled workers.

The average monthly number of employees in manufacturing rose to 41 in the year to January from 39 in the previous period.Group employee numbers increased to 67 from 65.

Mr Macnaughton said that the company had benefited from being able to employ skilled workers who had migrated from other EU countries. However, he complained about the scale of the regulatory burden imposed on small and medium sized enterprises by the EU.

Mr Macnaughton said that he would wait to see what concessions UK PM David Cameron could wring from leaders of EU countries before deciding how to vote in the referendum the UK Government plans to hold on membership of the union.