Industrial materials company Cookson Group said its precious metals division - which employs 250 people in Birmingham's Jewellery Quarter - was still profitable despite enduring a tough time.
The slow down in consumer spending has meant a slower demand for products during the third quarter, the company said.
Revanue of #60 million in the Precious Metals division was down seven per cent at constant exchange rates and, after excluding the precious metals content, net sales value was also down nine per cent at constant exchange rates.
Cookson said: "This reflected the depressed retail environment for precious metal jewellery products in all of the division's key markets, particularly in the United Kingdom.
"Despite very difficult market conditions, the division has remained profitable due to the cost saving initiatives enacted over the last year.
"These included headcount reductions in the United States and the complete restructuring of operations in France."
The company would not comment whether it planned to sell its Birmingham operations as part of its effort to raise #100 million from disposals by the end of 2006.
Analysts claim disposals so far amount to #13 million as the company seeks to cut debt built up by acquisitions in the 1990s tech boom.
But the company said the situation was looking brighter for the group, with a 24 per cent rise in pretax third-quarter profit and said it remained on course to improve its annual performance.
Cookson, which supplies the "plumbing" used in the making of molten glass, iron and particularly steel, has been helped by an increase in world crude steel production led by China.
"Given the market conditions we are experiencing, we continue to expect that overall performance for the full year will be slightly better than that achieved in 2004," chief executive Nick Salmon said.
Finance director Mike Butterworth said he was comfortable with analysts' forecasts for a headline annual profit of about #90 million, #120 million pounds trading profit less #30 million in interest.
Cookson said headline pretax profit for the three months to end-September rose to #27 million, on turnover up one per cent to #411 million.
It reported slightly improved revenue at its ceramics and electronics divisions.
"Cookson has released a very robust Q3 trading update with further margin improvement," Numis Securities said.
"But there was no mention of further disposals of non-core businesses or assets. Clearly there is more to come here and we speculate that Precious Metals is an obvious target."