Cumbria-based Cropper's £1.7m profit compared favourably with the previous year's £261,000 loss and was achieved in spite of declining turnover and volume.

Worst hit was the company's Technical Fibre Products (TFP) division, which suffered the double blow of the restructuring of a major customer and de-stocking by others due to reduced economic activity.

This led to a 17% drop in turnover for the division, with sales to the US down 2% in sterling terms (21% in US dollar terms) and sales outside the US down 30%.

The company's Speciality Papers division fared much better, trading strongly in the first six months and recording a 6% year-on-year increase in average selling price, despite falls of 2% and 8% in turnover and volume respectively.

Company chairman James Cropper attributed the strong performance to drops in raw material prices compared with the previous year, although he warned that prices were now on a rising trend.

"Profitability has benefited from a reduction in the cost of gas and pulp from the exceptional high levels of 12 months ago," he said.

"However, the price of pulp has been on a rising trend since the end of the previous financial year."

Cropper highlighted Northern Bleached Softwood Kraft (NBSK) pulp, which opened the new financial year at $580/tonne but had reached $730/tonne by the end of the first half.

"Some analysts currently forecast that the price of NBSK will continue to rise for the remainder of the financial year to peak towards $850/tonne," he added.

Turnover at James Cropper Converting was down 4% for the period, due to subdued activity in mount-board and display-board markets, while The Paper Mill Shop (TPMS) traded at a loss for the first six months, despite a 1% increase in turnover.