A MANUFACTURER that has enjoyed a bumper year said last night that talk of a recession was premature.

Grundfos Manufacturing, in Sunderland, saw turnover rise 10.5 per cent to £77m last year, with sales rising by 12 per cent.

Managing director Niels Vinther said: "This was the best year we have had in terms of sales.

"As far as Grundfos in the UK is concerned, a recession has certainly not materialised this year."

His comments followed warnings from senior analysts that results next month are likely to confirm manufacturing is in recession.

The plant, in Ferryboat Lane, Castletown, employs 300 people making circulation pumps, mainly for central heating systems. More than a third of its sales were exports to mainland Europe.

Its exports were unaffected by fluctuations in the euro exchange rate thanks to fixed-rate contracts, a policy that saved the group more than £2m in the previous financial year.

However, profits were £3.59m, about 20 per cent below forecasts, due to rises in the price of raw materials, especially steel.

"We are probably looking at 2005 with a bit more caution," said Mr Vinther.

"We do expect to have respectable sales growth, but price increases in our raw materials look set to continue. We will focus on becoming more cost effective ourselves."

Sales are forecast to increase by four per cent.