Lower costs and stronger gross margin helped Midlands kitchens manufacturer Mereway return to profit in the year to end March.

The Birmingham based producer made £358k at the operating line — reversing its £366k deficit of 2012–13 — and £127k before tax, with its improvement coming despite sales being down 16 per cent to £14.2m.

Operating expenses — including raw materials — decreased by £612k while gross margin climbed 80 basis points to 35 per cent, the result the company said of an improved yield and favourable exchange rates.

At the beginning of its financial year Mereway spun out its Trend Joinery subsidiary — which runs the trade kitchens, bedrooms and bathrooms brand Trade Interiors — by way of a dividend in specie to its shareholders.

Sales at Trend — which retains a number of shareholders in common with Mereway — rose by 59 per cent to £4.4m during the same trading period.