The relationship between tomato ketchup and Irish whimsy is not immediately apparent but Fruitfield Foods has proved how lucrative this unlikely combination can be.

Sales of its unashamedly twee "Old Irish" brand of sauces and spreads in the United States topped €300,000 in 2002 and were expected to climb even higher this year.

However, the euro's soaring value has dented the south Dublin firm's US revenues and squeezed profits across all operations, according to managing director Mr Michael Carey.

Should the euro's ascendency over the dollar persist in the longer term, Fruitfield's American ambitions would be compromised.

Overseas sales accounted for €5 million of €30 million turnover last year, two-thirds of which were outside the euro zone.

Any further rise in the strength of the euro would severely undermine Fruitfield's competitiveness. "Our ability to challenge for new business will suffer," Mr Carey said.

"One-sixth of our turnover is generated abroad and the majority of this comes from outside the euro zone. Our capability to compete in these countries has already has been seriously damaged," he said.

At the mercy of the resurgent euro, Fruitfield, like hundreds of exporters to the US, has been forced to review its cost base urgently.

"A weak euro allowed us perhaps to overlook overheads that had become too high. Now we have no choice but to confront them," he said.

"Wages and insurance were maybe allowed to grow by too much but, because of the euro's softness against the dollar and sterling, we were able to ignore this. Now we can see them for what they are and have to take action.

"We can't do anything about the state of the currency but we must do something."

Fruitfield is also on the back foot in domestic markets, where rivals from outside the euro zone enjoy a significant competitive advantage.

Cheaper raw materials have offset falling profits but not to a significant degree.

"Some of our materials have become cheaper but the bottom line is that we remain exposed."

Fruitfield, which employs 150 and is best known for its range of jams and Chef sauces, remains committed to the US market, where it also sells toffees and chocolate. But with no end in sight to the euro's upward trajectory, Mr Carey faces the future with trepidation.

"We'll just have to hope it gets better and concentrate on lowering our cost base. It's frustrating when our competitors overseas often have the upper hand however."