LONDON -- British supplier Tomkins Plc forecast improved full-year earnings on Wednesday as it posted a 6 percent fall in third-quarter operating profit due to a weak dollar and higher raw material costs.
But shares in Tomkins, which makes 70 percent of its sales in the United States and does not hedge its foreign exchange exposure, fell 5 percent as investors fretted about the impact of the dollar as it hit a nine-month low against the pound.
Tomkins, which sells parts used in car engines and air conditioners, said its operating profit for the three months to end-September was 70 million pounds ($130 million) on sales down 10 percent to 736 million pounds.
That left operating profit for the first nine months down 2 percent at 215 million pounds on sales down 5.6 percent to 2.28 billion pounds. Tomkins said the weak dollar had shaved 22.8 million pounds off operating profit for the nine-month period.
Tomkins has not hedged its foreign currency exposure for several years, believing that, in the long run, hedging is neither a help nor a hindrance, a spokesman said.
Tomkins, whose last full-year operating profit was 272 million pounds, has shed over 3,000 jobs and sold non-core businesses as part of a three-year revamp.
Chief Executive James Nicol said: "Despite the recent softness in the automotive aftermarket, a slowdown in automotive production volumes and higher raw material costs, we continue to expect an improvement in the underlying performance of the group in the current year".
Nicol also said higher costs were being partly offset by manufacturing and operating efficiencies.