Battery and electrical products maker Gold Peak Industries yesterday warned that a combination of rising raw material costs, a possible interest-rate increase and the mainland's measures to cool its overheating economy could threaten profits. 'Rising material prices, the austerity measures recently implemented in China and a possible interest-rate increase may have an impact on the group in the coming year,' chairman Victor Lo Chung-wing said. General manager Raymond Wong Wai-kan said the cost of raw materials had already affected earnings. Announcing the firm's results for the year to March, Mr Wong said operating profit shrank 56.3 per cent to $33.1 million from $75.6 million in the previous year. This was partly attributed to the company no longer being able to consolidate the results of Lighthouse Technologies, a maker of light-emitting diode screens, after it became an associate in March last year. The drop was also due to rising prices in copper, steel, nickel and cobalt, Mr Wong said. Nickel and cobalt are used in Gold Peak's battery products. In the past year, nickel prices have grown more than 60 per cent. But in the past few weeks, they had fallen about 20 per cent, Mr Wong said. Cobalt prices have risen more than 50 per cent in the past year. 'The company is trying to share costs with its suppliers and customers,' Mr Wong said. Despite the drop in operating profit, net profit surged 152.6 per cent to $173.8 million, mainly due to a one-time net exceptional gain from selling its interest in electrical-wiring businesses in Australia to Schneider Electric of France. However, Gold Peak's investment losses widened to $79.9 million from $28.9 million previously. 'Over time, we may divest some of our investments. We may sell our investments in non-core businesses like electronics. These will be booked into our profits,' Mr Wong said.