Phillip Lowe, chairman, said trading remained difficult and price competition severe, with lower average selling prices and higher production costs.
Speciality products, in particular, faced significant increases in raw material costs in the second half, which had squeezed profit margins.
The shares dipped 10p to 345p. Mr Lowe said he didn't know why the shares had fallen. "Although we said trading remained difficult, we also said the longer-term outlook was encouraging."
Yorkshire's growth was underpinned by increased production and sales volumes. This, in turn, had been driven by the company's £40m investment programme over the past three years to improve manufacturing capacity and product quality.
Turnover rose 7 per cent to £119.8m. Mr Lowe said: "It has been the same story for 12 years. We have made up for a weakness in demand and prices by driving up production and sales." Chemical prices over the past two years had fallen by about 8 per cent.
The company saw market conditions become more fragile and volatile as the year progressed, but all divisions had a strong fourth quarter.
Yorkshire Colours saw profits dip to £7.9m against £8.2m in the previous year. Yorkshire speciality products, despite the raw material increases, advanced profits to £3.9m (£2.8m), while Yorkshire Australia also did well, increasing profits to £3.7m (£3.2m).
Yorkshire America profits faltered slightly. Mr Lowe said the group hoped to benefit from increasing trade liberalisation and environmental awareness.
The group, he added, was also emphasising product innovation, with dyestuff ranges for cellulosic fibres being introduced this year.A strategic review would be completed in 1995 "to chart a course for continued growth into the next century".
A final dividend of 5.85p gives a total of 8.6p (8.1p).
Phillip Morrish, chemicals analyst at Smith New Court, the broker, forecasts 1995 profits of £15.7m, towards the lower end of the City range.Reuse content