Environment

SCA, the global packaging and paper company, reported a "significantly weaker result" for its packaging business today (29 October) after being hit by lower demand and stockpiling of liner.

Net sales for the packaging group remained constant at SEK8.4bn (£678.2m) year-on-year for the third quarter to 30 September 2008, while operating profit fell by 51% to SEK319m.

SCA president and chief executive Jan Johansson said: "Demand is lower, and the large inventories of liner held by producers continue to plague the industry.

"SCA is acting by cutting its testliner production by a total of 50,000 tonnes of October and November."

Demand for corrugated board has softened in Europe with all major markets showing lower demand, according to SCA.

Despite pressure, average corrugated prices are 2% higher than at the start of the year and 4% higher than a year ago.

SCA increased group sales by 4% year-on-year to SEK27.4bn for the third quarter to 30 September 2008, while it pre-tax profit fell by 29% to SEK1.4bn.

The company sold its UK and Ireland corrugated business to Sociedad Anónima Industrias Celulosa Aragonesa (SAICA), the Spanish corrugated company for £100m in June.

SCA retained its "value-added" packaging operation in the UK and Ireland, which also has 20 factories and a turnover of £130m.