Weakening markets and the falling dollar will leave industrial distributor and manufacturer Unidare facing a "substantial reduction" in profits for the year, according to executive chairman Mr Jack Hayes.

The board has deferred dividend payments on the grounds of increasing market uncertainty.

The Dublin and London-listed company yesterday reported a fall in profits before tax and exceptional charges for the six months to March 31st to €2.3 million from €2.5 million last year. Adjusted earnings per share came in at nine cents, compared with 10.6 cents for the same period in 2002.

Net debts at the end of March were €17.9 million. Its Dutch subsidiary, water heater manufactuer Daalderop, accounted for €5 million of this with the construction of a new plant.

Sales for the period were €104.8 million, more than €25 million down on the comparable figure for last year, €129.9 million.

The company attributed €14 million of the fall in turnover to currency translation and a further €7 million to discontinued activities (namely the Canadian business it sold in April). Operating profits fell 10 per cent to €4 million.

Commenting on the results, Mr Hayes said there was evidence of further weakening in Daalderop's markets and those of its Unidare's British distributor, Eland.

He said that sales and margins continued to come under pressure in the US.