Engineering firm Tomkins' interim profit was at the lower end of forecasts, dragging shares lower despite a rise in the dividend and positive outlook for 2006.

Tomkins, which sells parts for car engines and air conditioners, said interim profit f rom operations before restructuring costs was £61.9 million versus £148.9 million a year ago.

Nine analysts polled by the company had forecast in a range of £161 million to £167 million. First-half pretax profit rose 7.1 per cent to £131.8 million.

"The residential market is expected to weaken, but continue at very healthy levels, and we expect to benefit from increased refurbishing activity. The outlook for the non-residential sector is strong," a company statement said.

Chief executive James Nicol said acquisitions were likely in industrial and building prod-ucts and disposals in the automotive sector were also likely before the year-end.

"On the industrial side we look for technology to give us a sustainable, advantage, so anything in the motion area we supply to in our power transmission area would be attractive," Mr Nicol said.

The company would also seek to buy facilities in China to help supply customers in China and North America.

Mr Nicol said Tomkins was looking at a distribution capability in the Middle East for industrial products.

"We have a relatively strong balance sheet. A lot depends on the cash generation out of what we acquire in terms of total firepower," he added.

Mr Nicol said the company "was taking a hard look" at products in the automotive area that could be sold because competitors could make generic products with no patent protection.