Chairman Anthony Hichens said market conditions had remained difficult, with margins in the groups paper business affected by the continuing cyclical downturn in the paper market.

The packaging-manufacturing group saw pre-tax profits fall 12% to 39.3m for the six-month period to 31 October 2003. Turnover was up slightly to 745m.

Despite the market conditions, the groups UK paper business, St Regis, increased its production volumes through efficiency, maintaining its strength in the domestic market.

Sales in the paper and corrugated packaging sector of the business fell marginally to 376m, while operating profit was down to 28m, a fall of 12%.

Trading conditions in the groups John Dickinson office products manufacturing division, especially envelopes, suffered from intense competition from continental Europe.

Hichens said this was being addressed by new sales and marketing initiatives and further cost reductions in the business areas.

The company recently announced the closure of its corrugated packaging plant in Govan, which it acquired in October for 900,000 and was formerly part of the Macfarlane Group (PrintWeek, 11 December).

John Dickinsons sales fell 24% on the same period last year to 24.4m, with operating profits halved to 1.1m.

DS Smith also recently announced the new appointments of Jean-Paul Loison as an executive director of the company, and Christopher Bunker as a non-executive director.

The group expects to report full-year results in line with expectations.