British Polythene Industries has said trading volumes have continued to run ahead of last year and its performance in the six months to June 30 will be slightly ahead of 2014.
The board said: "With this volume increase, and the recovery in our North American business, we would have expected an even better performance but, as we indicated at the AGM, margins have been compressed in recent months as we pass through unprecedented increases in raw material costs."
The group said in May that its progress was mainly due to increased sales of silage stretch wrap, reflecting new capacity. The price of polyethylene polymer, having dropped in the first quarter, had then rebounded to high levels, but was likely to get back into balance by the summer. It said price increases would be passed on, though margins would be affected in the short term.
It said yesterday: "It now looks as though the (European) raw material price increases are running out of steam, having reached record levels, well above (the price) currently available in the Far East.
"In addition, despite progress in their local currency, the excellent return from our European operations is being affected by the translation into sterling.
"Nonetheless, progress in these volatile and difficult trading conditions is a commendable performance, and underpins our confidence in the outcome for 2015."
Toby Thorrington, analyst at Edison Investment Research, said: "While market conditions have been testing , this only serves to highlight the strength of the management team in being able to deal with them..... the underlying business is in very robust shape and this will come to the fore again in due course."
Thomas Rands, analyst at Investec said: "BPI's strong underlying track record in recent years has continued although this has been partially masked by external headwinds (raw materials and FX). BPI's valuation is currently the lowest in our universe which in our view looks unjustified given the consistent track record."
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