The group posted a 71m operating profit for the first half of 2002, a rise of 45% on the same period last year. This was despite a 3% fall in turnover to 626m for the first half.

Although turnover for its carbonless operations fell 5% to 110m, it turned last years 17.7m operating loss into a 2m profit.

Carbonless Paper Operations Europe chief executive Grard Bougniart said the turnaround was due to improvements in demand, low pulp prices and stable price levels for products.

"The first half of this year has been the highest in volume levels for a long time," he said.

The divisions diversification in its product line had also contributed to improvements, as had the groups use of online machinery.

But despite the divisions diversification, Bougniart stressed that Arjo remained committed to its carbonless operation.

Turnover for the groups merchanting operation, Antalis, fell 3% to 805m, but operating profits almost trebled to 5.3m.

Despite tough market conditions last year in the UK, France and Italy, the group said it planned to continue with European expansion.

Story by Andy Scott