Lurpak butter maker Arla left forecasts untouched today as it looked to recover from its warning that profits would be hurt by higher oil prices.

The UK's largest supplier of milk said in August that it had not been able to protect margins from the pressures of rising oil costs and utility bills.

Arla is based in Leeds but has dairy processing plants in Northallerton, North Yorkshire and in Newcastle.

It is due to post full-year figures on November 30, but said today that it would meet revised expectations for the period and that it had also put in place a range of measures to offset the pressures. It did not provide further details.

Analysts are expecting profits in the region of £46 million for the year to September 30, compared with the £49 million pencilled in previously.

Elsewhere in the business, Arla said its brands continued to perform well with Lurpak growing strongly and Anchor Lighter Spreadable growing market share following its recent launch.

The second phase of investment in its Stourton dairy near Leeds has also been completed to give the company additional capacity to meet strong demand for Cravendale branded milk.

The supplier of milk to Asda and Tesco also said it continued to increase volumes in the supermarket sector, despite a continuing competitive market.

It added in a trading update today: ''As we said in August margins have been adversely impacted by higher oil and utility prices where previous price increases have effectively been negated. We have put in place measures to reduce the impact of these cost pressures.''

Oil prices matter to Arla because they determine how much the company pays for its packaging and fuel, while parallel rises in electricity and gas push up the cost of powering its machines.

Chief executive Tim Smith said in August the company was continuing to examine where costs could be eliminated beyond the savings made from the merger of Arla UK and Express Dairies in 2003.

Arla shut its distribution centre at Stratford in east London earlier this year after closing four other sites, including a diary at Bamber Bridge in Lancashire and a glass bottling plant at Hatfield Peverel in Essex.

The firm also said at the time that it was looking to see whether the big supermarkets can be persuaded to put up prices again to help it mitigate the pressures on its balance sheet from higher fuel costs.

However, Mr Smith said there were no plans to approach farmers that supply Arla with milk to see whether they would be willing to cut their prices.