Business

Packaging Corporation of America (PCA), the producer of containerboard and corrugated packaging products, blamed high energy costs for its fall in profit in the first six months of the year.

The Illinois-based company reported an 11% decline in pre-tax profit to $121.3m (£61m) to 30 June. Sales were $1.2bn compared with $1.1bn in 2007.

PCA had special expenses of $3m for tornado damage at two facilities, start-up costs for two major mill projects and costs related to debt refinancing during the second quarter.

Higher transportation, fuel and electricity costs were only partially offset by higher prices.

The firm's containerboard production was 614,000 tons in the second quarter, down 0.3%, while containerboard sales were up 3%. Total corrugated product shipments were down 0.4% compared with 2007, but rose by 4% over the first quarter.

PCA chairman and chief executive Paul Stecko said the business remained "quite strong" throughout the second quarter.

"Unfortunately, escalation in energy and energy related costs was so severe that it more than offset the earnings benefits of higher prices and good operations," he said.

Stecko expects improved earnings in the third quarter, mainly from price increases which have already been announced. He said higher energy costs would continue to have an impact on profit.

PCA operates four paper mills and 67 corrugated product plants in 26 states across the US. Sales were $2.3bn in 2007.