Engineering group Renold has plunged into the red after taking on the costs of closing its Staffordshire site.
The company, which makes industrial chains and related power transmission products, automotive cam drive systems and machine tools and rotors, saw annual pretax profits sink from £ 4.7 million to a £6.8 million loss.
Turnover at the group rose to £197 million in the year to March 31 , up from £192.1 million in 2004.
The Manchester firm attributed the loss in part to the £3.2 million rationalisation of the Burton conveyor chain facility and the creation of a UK service centre.
It said it had also suffered a £2.4 million goodwill impairment charge relating to the acquisition of Leicester-based Jones & Shipman.
Renold said steel prices, which rose by 40 per cent year-on-year, and the weakening of the euro against the dollar also had a major impact on second-half profitability.
The company will omit to pay a final dividend in 2005 due to reduced earnings and cash needed to fund restructuring activities, having paid an interim dividend of 1.5 pence in January.
Chairman Roger Leverton said: "Steel price rises had a major effect in the second half of the year with the group experiencing an average year on year increase of some 40 per cent in costs.
"Steel represents the major part of raw material cost for the group and whilst sales prices are being increased, it is proving difficult to fully recover these costs, particularly from OEM customers.
"Continuing weakness of the US dollar also had an adverse impact on performance as did slowing volumes in the automotive business."
Mr Leverton said the company was looking to outsource production to lower cost economies with a facility planned for Poland to be operating later this year, and negotiations were also underway with a Chinese manufacturer to set up a Renold-owned manufacturing capability in the country.