Ontario's Magnotta Winery said sales increased 2.4% in first half, but issued a warning over rising cost pressures on its business.

Magnotta, one of Ontario's leading wine firms, said revenue reached C$11.9m (US$11.1m) for the six months ended 31 July. Net profit rose 4.3% to $788,000, compared to the same period last year.

The group pinned the sales rise on volume expansion, boosted by extra marketing, and also higher prices for Chilean grapes sold to third parties.

It issued a warning over rising costs, however. Gross profit margin slipped slightly from 50.4% to 49.7% during the period, due to "increased cost pressures for raw and packaging materials, energy costs, as well as higher Ontario grape prices in the first half of fiscal 2009 versus fiscal 2008".

A strong Canadian dollar helped to insulate against cost increases, it added.