Kidde, the fire protection group, warned yesterday that the weak dollar would knock about £10m off its profits for last year but gave an upbeat assessment of its prospects for 2004.
The company, which makes fire engines, escape ladders and fire protection systems for aircraft, said currency effects would offset the cost savings it had achieved through efficiency improvements.
The US market accounts for about half of Kidde's sales and an even higher proportion of profits, leaving it more exposed to currency fluctuations than other British engineering companies.
Despite the reduction in US profits, Kidde said last year as a whole had seen a return to sales growth and improved margins. Commercial aerospace sales were down modestly while demand for combustion control products suffered from the downturn in the US electricity market. But Kidde's military business remained strong and it increased sales at its residential and commercial division.
Kidde said it had hedging contracts in place this year to protect its US earnings at a "worst-case" exchange rate of $1.635 to the pound. Yesterday's rate was around $1.83.