Group profit after financial items from January to June dropped 2.7% to 88m (Skr1.27bn), while Holmen Papers operating profits fell nearly 24% to 58m.

The market for newsprint and magazine paper remained weak, said a spokesman. Deliveries of newsprint within western Europe from west European producers were 8% lower in the first half than a year ago.

Deliveries of magazine paper were slightly more stable, falling 2%, and second-quarter deliveries rose 11% on the first quarter.

The Swedish group, which has 5,100 staff and also owns Iggesund Paperboard and Timber, said lower volumes and lower prices hit results. But this was partly offset by positive currency effects.

Group turnover for the six months fell 3% to 550m, while Holmen Papers turnover from its three Swedish mills and one in Spain fell 7% to 270m.

The paper division produced 738,000 tonnes in the first half of 2002, down 50,000 on last years figure.

Story by Jez Abbott