PAPER and packaging group David S Smith, which has a major mill in Darwen, has seen its profits collapse by half.

Pre-tax profits fell to £29.3 million for the half year to November from £58.6 million. Turnover fell from £615.4 million to £554.8 million, with more than half of the fall blamed on the strong pound.

The group's St Regis Paper division, which owns Hollins Paper Mill in Darwen, benefited from a growth in demand for corrugated board across Europe but suffered lower profits because of sterling with profits substantially down.

Chairman Alan Clements said the group's performance in the second half of the year would continue to be depressed.

"Our earnings have been badly hurt by sterling's strength and an extremely competitive environment for packaging, paper and officer products," he added.

However, he added: "In the medium term, good growth in demand, industry consolidation and rationalisation of industry capacity should lead to a gradual improvement in our markets."

The company raised its half-year dividend by 3.8 per cent to 2.7p.

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