The firm issued the warning on its energy bill as it released its half-year results to 31 October 2005.

Chief executive Tony Thorne said energy costs had initially been expected to increase by 18m, from the 73m incurred in 2004-2005. "Following the recent sharp rises in energy prices we anticipate this will be in the range of 20m-23m."

However Thorne said the company should be able to mitigate most of this further increase. "But the outcome for next year will be dependent upon the degree to which higher energy prices are sustained during the winter months," he said.

Despite a tough trading environment for the first half of the year, DS Smith's sales improved by 2.6% to 821.6m, however pre-tax profits slumped by 18.4% to 30.5m.

Thorne said the company had also benefited from the sale of its office products business John Dickinson Stationery. It was sold to European office supplies producer Groupe Hamelin for an undisclosed sum in July this year.