Black Country DIY hardware firm Eliza Tinsley Group has swung into pretax loss - but anticipates further growth from its operations overseas.
The Brierley Hill-based business, reporting for the six months to September 30, said the UK consumer market remains subdued.
Its greatest challenge remained its UK engineering arm, although the company's Smithson plant in Wolverhampton showed a "useful improvement" in performance following restructuring.
The company posted a pre-tax loss before exceptionals of £551,000 from a profit of £85,000 a year earlier on turnover of £41 million, up from £37 million.
Chairman Michael Borlenghi said, that in the six months under review, the group's operations outside of the UK saw excellent growth.
That was based on new contract wins from "earlier development initiatives which contributed significantly to profitability with operating profits in these areas virtually doubling."
The greatest challenge remained UK engineering operations.
He said: "Following its recent restructuring, the Smithson plant, based in Wolverhampton, produced a useful improvement in performance."
But at the company's Evenwood and Milcutt sites - based in County Durham and Bedfordshire respectively - the "deteriorating margins available in the marketplace necessitated further surgery which has been costly in the short-term."
Evenwood had been "down-sized" to remove its third shift in order to produce a business that will generate cash on a lower level of turnover.
Mr Borlenghi said: "The opportunity is being taken to jettison low margin business that ties up working capital. Following the success of this programme, a similar approach is now being adopted at Milcutt."
The board expected to see growth in the group's over-seas activities with new business wins coming through on a regular basis.
Consumer markets in the UK were likely to remain subdued although the "need purchase" nature of the group's consumer product range "will mitigate against the worst aspects of this." ..SUPL: