Engineering group Metalrax has bounced back into an operating profit after improving margins in the first half of the year.
The Kings Norton-based firm, which supplies to the medical, off-highway and premium automotive markets, made a pre-tax loss of £500,000 in the 26 weeks ended July 4, compared with a loss of £2.6 million in the same period last year.
However, an efficiency drive has seen the company swing from a £600,000 operating loss last year to a £600,000 operating profit this, despite a fall in overall sales.
The company was boosted by an improvement in gross margins which were up by four per cent, to more than 26 per cent.
Metalrax, which last year warned it could be at risk of collapse ahead of re-financing discussions with bankers, said that while there had been an improvement in fortunes in the first half, fears remained about economic conditions.
Chairman Andrew Walker said: “I am encouraged by the first half performance in terms of cash generation and profitability. Looking at the strengthening of our order books, I hope to report further progress during the second half when we announce our results for the full year.
“Taking these factors into account, the board expects to exceed market expectations for the current year.
“The level to which year-end results could be exceeded will be tempered by the impacts of any economic slow-down or ‘double dip’, government spending cuts and reductions in USA spend on hospitals related to healthcare reforms.”
Metalrax saw group sales fall from £31.4 million in the first six months of last year to £29.3 million in the same period this year.
However, it benefited from a reduction in costs, as overheads had come down by £1.7 million as a result of what the firm called “focussed management action”.
The firm said both of its divisions – specialist engineering and consumer durables – had reported an improved performance from the corresponding period in 2009 and were now operating at break-even or better.