Kings Norton-based Thomas Walker has swung into a pretax loss in the six months to the end of December.
The company, which manufactures and sells fasteners for the clothing industry, saw losses of £16,335 after a profit of £93,304 the year before, and said it was "cautious" on the outlook for the second half of the year.
Turnover was £2.67 million, up from £2.54 million a year before.
The group said it was cautious about the outlook for the second half of the current year, with no significant improvement in trading conditions expected.
Managing director Edward Cook said the firm was negotiating "a difficult period of transition".
The company has recently made a number of acquisitions in the brass stamping industry as the garment accessories market gradually transfers to the Far East.
The latest was the purchase of Yardley-based Leslie Group last December.
"We are currently in the process of transferring Leslie production from Yardley to our other sites in Digbeth and Kings Norton," Mr Cook said. He said the benefits of this process were unlikely to be felt before June 2006.
The company said it will maintain the interim dividend at 0.15 pence per share.