The impact of a strong pound was felt by a major engineering firm yesterday as it revealed profits and sales would be hit.
Bodycote International, which specialises in heat treatment and testing to motor, aerospace and power firms, also warned it had been hit by rising fuel bills.
The Cheshire-based group, which employs 250 in the West Midlands, posted a 20 per cent rise in half-year profits to £35.1 million, although it said second-half sales could drop £6.3 million and operating profits £900,000 if sterling remained strong against the dollar.
The pound is near a 12-month high, fuelling concerns from organisations such as the British Chambers of Commerce. Analysts are predicting a rate of $2 dollars to the pound by the end of the year, compared with almost $1.90. The announcement saw Bodycote shares finish 11.5p dpwn at 237p yesterday.
Acquisitions and the ability to weather rising fuel bills helped the group's performance, which included a 21 per cent rise in revenues to £279.3 million.
Despite concerns over exchange rates, chief executive John Hubbard was upbeat.
He said: "We remain confident full year results will be in line with expectations. With good outsourcing and acquisition prospects and a focus on operational flexibility we are well placed to deal with any change in market conditions."
During the first half Body-cote acquired a string of companies, including Warringtonfire to its heat treatment arm, which provides fire testing and safety services.
It added the soil and water testing arm of environmental monitoring group Casella in Runcorn and Grimsby-based Tetra food laboratories to its health sciences portfolio.
Mr Hubbard also revealed plans to spend £40 million on plants in India, China, Mexico and eastern Europe by the end of the year.
A spokesman said the shift was being driven by customers continuing to move to cheaper locations in a bid to cut costs, but said its UK operations would not be affected.