Boxmore International, the Northern Ireland packaging group, has warned that recent rises in British interest rates and in sterling's value present difficulties for exporting.

The warning came with Boxmore's results for the six months to the end of June where pre-tax profits were 3 per cent higher on £7.5 million sterling (€11.7 million).

On the positive side, chairman Sir David Fell said there had been a gradual improvement in Boxmore's markets from the beginning of the year, although higher raw material costs would probably persist through the second half of 1999.

Chief executive Mr Mark Ennis said sterling's strength had been a significant factor both for Boxmore's exports and also increased imports into Britain from its European competitors. The group had generated major increases in productivity to reduce sterling's impact, he said. He would be disappointed if Boxmore did not at least match current analysts' profits forecasts for the full year of £15-£15.5 million.

Higher interest charges accounted for the modest rise in pre-tax profits, but at operating level Box more suffered a contraction in its margins with operating profits up 10 per cent to £8.8 million while turnover in the six months rose 16 per cent to £60.4 million.

The moderate half-year results derived from a poor performance in its chemical and industrial division where turnover fell by 7.4 per cent to £8.8 million. Turnover rose strongly in the group's other two packaging divisions - pharmaceutical/healthcare and food/drink rose by 24 per cent and 19 per cent respectively to £25.7 million and £17.3 million.

Difficulties in the agro-chemical market were the main reason for the fall in turnover in the chemical and industrial division, but Boxmore has invested in new product lines to address the seasonality problem.