Stoke-on-Trent potter Portmeirion has turned around its fortunes, posting a pretax profit of £1 million in 2005 from a loss of £1.6 million the previous year.
That came on turnover of £27.6 million compared with £27.7 million.
Chairman Arthur Ralley said 2006 would also be challenging, with consumer spending on a tight rein.
Sales so far have been below the previous period, but broadly in line with expectations. The trend is expected to improve as new ranges come to market in the second quarter.
Portmeirion maintained its dividend for the year at 13.25 pence per share after a final payout of 9.95 pence.
The group said it was nearing its short-term goal of ensuring that the dividend is covered by earnings.
It said the turnaround to profit followed a major re-organisation of the company's manufacturing plants.
It also achieved a 2.7 per cent improvement in sales on a constant exchange rate basis with an exceptional export performance, which more than offset a disappointing UK market result.
Sales in the US in dollars increased by 11 per cent to $18.275 million, representing 37 per cent of total sales in sterling.
Sales to South Korea increased by 41 per cent to £4.67 million, following a major expansion in the number of retail outlets stocking the company's classic ranges. It said there was still opportunity for growth.
Apart from Japan, where the company changed from selling through a wholly-owned subsidiary to a local distributor, all other major export markets showed healthy sales increases leading to a total group export increase of 18 per cent on a constant exchange rate basis.
The picture was not so positive in the UK however where sales were 19 per cent below the previous year.
The company said although the performance was affected to some extent by reduced consumer spending, and fewer tourists, it expects this "disappointing" trend will be corrected with the introduction of much needed new product ranges.
Five new ones including ceramic cookware designed by Sophie Conran are being introduced this Spring.
The result of the overall sales performance and exceptional gains on property disposal has increased the group's cash balance to £6.3 million at the end of the year.
It said there would be a further cash gain following the sale of the company's secondary warehousing site when the new warehouse is completed.
The company noted: "The markets in both the UK and US continue to be subjected to retail price deflation.
"Low cost retailers and the supermarket groups continue to expand their non-food offering, and our department store customers and independent retailers are responding by offering good quality products at ever lower prices.
"The group's strategy of producing excellent design and quality in new product ranges under the Portmeirion brand, sourced overseas, is now beginning to show results, while the classic ranges continue to be produced at our Stoke-on-Trent factory," the company added.