Mechanical parts supplier Brammer PLC (BRAM.LN) Friday increased its dividend 14% after reporting a return to profit in the first half of 2010, as it benefited from an uptick in manufacturing output and market share gains.

Brammer Chief Executive Ian Fraser told Dow Jones Newswires the company, which supplies parts like bearings and gear boxes to dozens of industries, expects full-year profit to return to 2008 levels provided the current benign trading environment continues.

Fraser said Brammer requires only that manufacturing activity remains broadly steady to keep increasing sales at a higher rate than the growth of the overall market. Brammer also expects to keep gaining market share, Fraser said. It currently estimates it has just 3%.

Brammer, which counts Associated British Foods PLC (ABF.LN), Coca-Cola Co. (KO) and Severn Trent PLC (SVT.LN) among its customers, Friday reported a pretax profit of GBP9 million, compared with a pretax loss of GBP2.6 million in the same period a year earlier.

Revenue increased 6.3% to GBP230 million from GBP216.3 million and net debt fell to GBP40.2 million from GBP69.4 million. It raised its interim dividend to 2.1 pence a share from 1.84 pence a year earlier.

Brammer said earnings benefited from seven new key accounts--broad supply deals with large national or pan-European customers--and new "insites," where the company manages a customer's inventory at its factories.

The food and beverages industry has now overtaken car makers as Brammer's biggest sector, said Fraser.

Brokerage KBC Peel Hunt said Brammer's first-half trading was in line with expectations. It rates the stock "buy."

At 0819 GMT, shares in Brammer were flat at 159 pence, underperforming a 0.3% higher Dow Jones U.K. Smaller Companies index. The stock has gained 33% since the start of the year.

Brammer, which raised GBP35 million in a rights issue at the end of 2009, is working with a German technology institute to research ways companies can save energy, said Fraser. It intends to advise its customers how to reduce their energy bills, and save money, by tweaking their manufacturing processes. This will help Brammer win new business, he said.

-By Rachael Gormley and Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; jason.douglas@dowjones.com

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