Titan Europe, the international maker of wheels and tyres for construction and farm vehicles based at Cookley near Kidderminster, has succeeded in passing to its customers last year's leap in the price of steels.
The increases last autumn were reflected in bumper half-year result yesterday. Profits jumped by nearly 70 per cent to £6.1 million on sales 29 per cent ahead at £70.48 million.
There was also a first contribution of a £300,000 operating profit from Titan Andys in Australia, acquired last September.
The interim dividend of 1.75p is not seen as a material increase over last year's, when Titan brought its shares to the AIM market in April. Broker Seymour Pierce is looking for a full-year total of 5.5p, which would be ten per cent more than last year.
That would give the shares a yield of 2.3 per cent at last night's price of 2431/2p, 2p ahead on the day and a new all-time high.
Mike Akers, chief executive, said the pattern of trade, which always favours the first half of the year for Titan - if only because of manufacturing shutdowns in August and December in Italy and France - was skewed even more towards the first six months this year.
"The normal demand cycle has been even more marked this year with exceptional orders in the first half," he said.
"The effect was most pronounced in the agricultural market."
He believes some customers may have stockpiled wheels to beat the steel shortage, just as Titan stockpiled steel at a cost of more than £2.5 million.
That cash should flow back in the second halfyear and the stocks run down, pushing cashgenerative Titan's gearing below the 29 per cent recorded in June.
The strong balance sheet leaves scope for more acquisitions, possibly developing its interests in India beyond the present 36 per cent stake in Wheels India.
"We are continuing to look at a number of possibilities," Mr Akers said. "It is central to our management approach."