Customer bankruptcies, including the collapse of Rover, will cost global automotive and engineering group GKN £4 million in write-offs and continues to impact on the stability of the automotive market.
In a speech at the company's AGM, chairman of the Redditch-based firm, Roy Brown, said trading in the automotive sector had been "challenging".
However, Mr Brown assured shareholders that expectations for the full-year performance of the group would not change.
"Trading conditions for the first four months of the year have been much as expected at the time of our February outlook statement," he said.
The 104-year-old engineering firm said automotive volumes were down in North America and Europe so far this year and profits had been impacted by high raw material costs.
However, Mr Brown said lower-steel surcharges would help offset a softening automotive market for the rest of the year.
GKN also said its aerospace and business was on track to deliver an improved performance.
In March, the firm landed a contract from the US-based General Electric Company to develop and manufacture the front-fan containment case for the GEnx engine selected to power Boeing's new 787 Dreamliner. The contract could win business worth as much as £2.6 billion.
In February, GKN reported a 2004 pretax profit before goodwill and exceptionals of £221 million. It tipped higher automotive sales in 2005, but said high raw material costs would add another £30 million to costs this year.
Meanwhile, Worcesterbased facilities service provider MacLellan Group said current financial performance remained in line with expectations despite previously announced £ 400,000 of unbudgeted costs resulting from the closure of Longbridge.
It added: "Financial performance in the new year is benefiting from the increased size and scale of the group's operations following the acquisitions made in the last quarter of 2004."