Walsall ironcaster Chamberlin & Hill yesterday warned that rising energy prices were putting margins under pressure.
The 113 year-old company exceeded expectations by increasing its underlying pretax profit to £1.14 million in the six months to September 30 from £900,000 in the same period last year.
Sales for the period rose by five per cent to £21 million and the company ended the period with a positive net cashflow of £ 240,000 compared with borrowings of just over £1 million last time.
The interim dividend is unchanged at 3.85p a share.
The company is consolidating its operations at sites at Walsall, Leicester and Scunthorpe, and said the move was expected to contribute to profits next year.
Chairman Tom Brown said C&H's foundry division had benefited from improved demand from the second half of last year onwards although markets had cooled in the second quarter of the current year.
"Currently. we face substantial increases in the price of electricity and gas. As a major energy user this will put some pressure on margins as we seek to fully recover them from our customers, but to some extent this is offset by weaker raw material prices," Mr Brown added.
C&H is also looking at ways of cutting the deficit run up by its final salary pension scheme, which resulted in a charge to the income statement of £102,000 during the period.