Fluctuations in exchange rates, however, eroded foreign earnings. Difficulties with cash flows from royalty collectors also led to disappointment. The shares fell 4p to 338p.
The company yesterday reported pre-tax profits 6.4 per cent higher at pounds 1.5m for the six months to 30 June. Turnover rose by 14 per cent to pounds 33.7m.
Richard Holland, chief executive, was confident about future performance.
He predicted that sales in the US would benefit from a new marketing initiative. He said factory closures would reduce production costs in Germany and the newly acquired violin manufacturing subsidiary, Hofner, would make a net contribution.
'We are not going for fireworks and flash-in-the-pan results - we want steady growth,' Mr Holland said.
Some analysts remained enthusiastic about the stock.
'The profits are a fraction less than I predicted, but I am expecting a bounce-back,' said Philip Meredith, small companies analyst at Kleinwort Benson.
He was encouraged by the confident tone of the trading statement and applauded management efforts to move production systems away from traditional craftsmanship towards more precise engineering techniques.
Roger Hardman at Granville Davies was unconcerned by the results. 'Their 150 years in the music business has taught the company they are always the last ones out of the recession,' he said.
Mr Davies forecast that next year a falling tax charge and further rationalisation of the group's factories would drive profits up a further 21 per cent to pounds 5.8m.
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