Environment

SCA, the global packaging and paper company, has recorded a 1% fall in operating profits in the first half of 2008 due to declining prices and high operating costs.

Sales for the first six months of the year increased by 6% to 54.852bn SEK (£4.5bn) compared to 2007 boosted by growth in the company's hygiene product operations.

However, SCA Packaging recorded a 4% sales increase for the three months to 31 June, but quarterly operating profits fell by 27% to 457m SEK due to the inability to recover higher raw material and energy costs through price increases.

Last month, the Swedish firm sold its conventional corrugated board business in the UK and Ireland to Spanish firm SAICA for £100m.

Selling the division, which generated annual sales of around £240m, will allow SCA to focus on the higher "value-added" corrugated packaging.

Jan Johansson, SCA Group chief executive, said: "In the packaging market demand had weakened and the high inventory levels of containerboard (testliner) at producers did not decrease which has put pressure on prices.

"Earnings for SCA's packaging operations weakened due to the price decline and higher costs in connection with operating shutdowns and planned production cuts."