STOCKHOLM, July 27, 2001 (Reuters) - Swedish pulp and paper group SCA posted 14 percent higher second-quarter profits on Friday, beating market forecasts, but warned of falling demand and weaker prices ahead for some of its products. The advance, both quarter-on-quarter and year-on-year, in April-June profits contrasted sharply with Nordic rival Stora Enso's sharply lower earnings for the same period reported on Thursday. SCA's share price, up by almost 20 percent this year but nevertheless priced at 9.6 times forecast 2002 earnings, rose 2.6 percent to SEK 235 ($22) by 0945 GMT. Stockholm brokers said the company's results were slightly better than expected but that investors were not showing much enthusiasm for the stock in a quiet market focused on a Wall Street-inspired rally in the technology sector. SCA's second quarter profit after financial items rose to SEK 2.02 billion from SEK 1.96 billion in the first quarter and SEK 1.77 billion in the second quarter of 2000. The mean forecast in a Reuters poll of analysts had been for a second-quarter profit of SEK 1.93 billion. "All business areas reported higher earnings," SCA said in a statement. Earnings per share, which for Stora Enso had fallen by 42 percent in the second quarter compared with January-March, increased for SCA by six percent quarter-on-quarter and by 20 percent year-on-year. SCA said 13 percentage points of its 24 percent growth in first-half turnover to SEK 40.8 billion was attributable mainly to acquisitions, eight percentage points to currency movements and three percentage points to higher prices and improved product mix. Cash flow and debts balloon Cash flow from current operations doubled to SEK 4.8 billion but net debt also increased, by 85 percent since end-2000 levels, to SEK 26.8 billion by end-June, primarily due to acquisitions. "For publication paper operations, a reduction in advertising volumes could result in a decline in demand and lead to some price pressure," SCA said, adding it would adjust production accordingly. Publication papers are part of SCA's forest products business area, the smallest of its three main divisions measured by sales though it generated one-third of group first-half operating profit. "Given current business conditions, hygiene products show the best stability in both demand and earnings development," SCA said, noting that hygiene products had contributed 44 percent of group April-June operating profit. "Despite some price pressure now prevailing in certain tissue products segments, continued volume growth and further reductions in raw material costs should be able to offset these effects," SCA said. CEO, Sverker Martin Lof, told a news conference SCA expected pulp prices to remain under pressure. Tissue paper, baby diapers and feminine hygiene products accounted for more than 48 percent of SCA's January-June net sales, up from 46 percent in the first half of 2000. In packaging, "the economic slowdown in various industrial sectors is having an increasingly pronounced effect on demand," the company said. "No substantial change in the situation of demand is expected during the autumn," it added.