The consumer electronics group Amstrad added zest to its recovery yesterday by delivering a confident forecast of demand for digital television products and a sharp increase in profits.

The group, chaired by Sir Alan Sugar, turned in doubled half-year profits at £8.2m on sales of £60.8m, a 34% increase. The company said it had benefited from "strong demand" for set-top decoder boxes used to receive British Sky Broadcasting's digital TV service.

Amstrad said it had orders through to the end of this financial year, in June, and "well into the next financial year". The company's performance is also being assisted by higher than expected quality levels, enabling it to release provisions taken against potential warranty costs.

A spokesman for the group said, however, that there were no plans to develop higher-specification set-top boxes, contrary to plans being implemented by rival suppliers such as Pace Micro Technology.

Instead Amstrad said it intended to launch a telecoms product next month aimed at the mass market and developed with BT's internet and multimedia division. The project, entering the market in time to have an impact on the next financial year, will include email and e-commerce.

Sir Alan sought to reward shareholders by more than doubling the dividend to 0.8p a share. He sounded a note of caution, however, by warning that Amstrad would allow its order book for TV sets to fall unless margins improved.

The company sells TVs through supermarket chains, often based on short-term sales campaigns featuring special offers. The company said this market was becoming increasingly competitive.

The group's push into overseas markets continues with the extension of a sales office in Hong Kong to handle business outside the UK.The office had been used only to oversee manufacture of Amstrad products by Far Eastern producers.

It said it sold significantly more cable TV products in the Australian market and noted that a number of new products had been introduced to the region. But "the company's focus is to enhance activities in higher-technology products".