Paper accounts for about 60 per cent of Smith's business but is very sensitive to consumer markets. Smith has also been hit hard by keen recycling policies in Germany which have flooded Europe with cheap raw material for paper and cut Smith's profit margins.
Taxable profits fell to pounds 15.4m from pounds 23.9m as the full extent of the downturn was felt.
Smith grew quickly in the 1980s, mainly by acquisition. In December 1991 it paid pounds 150m for Kaysersberg, a French specialist packaging company. Kaysersberg makes triple-thickness corrugated cardboard that can be used instead of wood, and bags in boxes, commonly used for wine.
Immediate growth for Smith will come from Kaysersberg. Analysts think that taxable profits may bounce to pounds 30m for the year to next May.
Earnings per share, hit by an exceptional pounds 8m cost of redundancies, were 11.5p compared to 23.3p. The dividend was held at 9.5p.Reuse content