SHARES in north west packaging firm API Group leapt more than 40 per cent after the company swung back into profit and said demand for new products was buoyant, although chief executive Andrew Turner warned about the potential impact of the economic downturn.

API, which has its headquarters in Poynton, Cheshire, and a factory in Salford, posted profits before tax of £700,000 for the first half of the year, excluding an exceptional gain of £4.1m arising from the sale of land in Shanghai.

In the same period last year, API incurred losses before one-off items of £1.2m. Revenues during the six months to September 30 were up seven per cent at £50.5m.

The company's shares surged 41 per cent to 7.75p yesterday and a further 3.23 per cent today to 8p.

API, which employs 130 staff at Poynton and a further 100 in Salford, said its recyclable laminate packaging, called Portabio, had enjoyed strong demand, including a bumper order for the sleeves for the new DVD of the hit Disney film Wall-E. Portabio is manufactured from corn starch and is biodegradable. Other projects using holographic film for tobacco cartons and perfumes contributed to API's sales boost.

API ran into difficulties last year as sales fell and losses widened, prompting a call to shareholders to resolve funding problems.