Industrial materials group Cookson is set to shrug off a downturn in trade at its precious metals operation which employs 250 people in Birmingham's Jewellery Quarter.
It said in a trading update yesterday that it expects its 2005 results to beat forecasts after its biggest units, ceramics and electronics, turned in better-than-expected performances at the end of the year.
Chief executive Nick Salmon said in a statement that trading in the fourth quarter beat hopes laid out by the company two months ago.
At that time it was predicting ceramics to dip at the end of the year compared with the third quarter.
But better-than predicted steel volumes in Europe and the US and a robust performance from the glass sector means trading profit is now expected to rise in the final quarter.
Meanwhile, a strong performance from the assembly materials sector has lifted performance at its electronics unit.
"The full-year results will show that these divisions (ceramics and electronics) have made substantial progress towards achieving the targeted margin levels," Mr Salmon said.
In November, Cookson was forecasting overall results to be slightly better than 2004, but it is now expecting more.
Merrill Lynch responded to the update by lifting its profit forecast to £98-£99 million from £97 million and reiterated its "buy" rating on the stock.
Cookson recently completed a planned £100 million disposal programme with the sale of its SCS speciality coatings business, as part of its strategy to focus on higher technology products.
It banked £32.1 million from the sale to private equity firm Bunker Hill Capital less than a month after the £51 million disposal of the Laminates business to Isola Group.
Mr Salmon said last week that further non-core disposals were likely over the coming year in an effort to cut debt and improve overall profitability.
On the downside, Cookson said its precious metals division had continued to suffer from weak markets in the fourth quarter, particularly in the UK where the pre-Christmas upturn was not as good as previous years.
The company said in November that the division was still yielding a profit, despite the downturn in business caused by reduced consumer spending.
It also revealed that the strengthening of the US dollar had added some £32 milliion to its debts which rose to just under £300 million by the end of last year.
Also, the pension deficit is set to increase by around £20 million at the full year, compared with the interim stage, as a result of the reduction in the long-term corporate bond rate used in calculating liabilities.
The deficit stood at £214 million at the end of June, with the UK scheme accounting for more than £100 million of that.
Headquartered in London, Cookson employs about 16,000 people in more than 35 countries and sells its products in more than 100 countries.
It is due to announce its results for the year to December 31 on March 14.