Anthony Habgood, chairman, said the 50 per cent of group earnings denominated in dollars would be impacted on translation if current trends continued. Meanwhile, although the fall in paper prices had stabilised, they were still showing a 16 per cent decrease in the year to January, which would hit first-half figures.
However, given the trends of the second half of 1996, the comparison should get increasingly better as the year wore on, he said. The strong position of the businesses in their markets and a strategy for growth, both organic and by acquisition, would enable the group "to continue to progress satisfactorily".
The warning came alongside news of a 7 per cent rise in pre-tax profits to a record pounds 114m for the year to December and the shares dipped just 4p to 221.5p yesterday. Analysts said they did not expect to shave forecasts by much as a result of the warning.
Last year's figures were boosted by an pounds 8.2m maiden contribution from six acquisitions made at a cost of pounds 80m in 1996. Since the year-end, the company has made four more purchases costing a further pounds 70m. With gearing cut to 14 per cent at the year-end, Mr Habgood said he would continue to seek out further acquisitions.
Nearly all the operations suffered from price erosion last year. In paper and plastic disposables, half the group, acquired businesses provided most of the sales growth.