Wellington, Nov 25 NZPA - The global beverage packaging company built by New Zealand billionaire Graeme Hart experienced a 50 percent rise in sales in China in its third quarter as the impact of the melamine scandal faded.

Beverage Packaging Holdings Group this week reported a strong third quarter result due to savings in corporate overheads, procurement, logistics and other costs.

Cashflow management, lower raw material prices, lower capital expenditure and a general de-leveraging of the business were also cited.

The company comprises packaging assets put together by Mr Hart's Rank Group after buying Carter Holt Harvey.

The three main businesses are SIG, a manufacturer of aseptic carton packaging for beverages, Reynolds Consumer, a supplier of aluminium foil, plastic wraps and bags in the US, and a closures unit, which is the leading global supplier of plastic closures for drinks.

Beverage Packaging Holdings is not listed but has listed debt securities.

The SIG business reported a 41 percent increase in adjusted earnings to 89 ($NZ186) million euro in the third quarter. Margins increased from 21 percent to 28 percent.

A 5 percent increase in revenue in the September quarter was driven a 28 percent rise in revenue outside Europe.

"The main driver clearly was China, which increased by 50 percent in that quarter," said Rolf Stangl, who is chief executive of the SIG business.

"What you can certainly see here is that not only that the market is growing significantly again in dairy after the melamine scandal. But also we see the reversal effect of a very negative September last year when the melamine crisis started," he said. "I think it surprised everyone in the industry how quickly China recovered, not only recovered but went back to old growth rates," he said.

Nearly 300,000 children fell ill last year after drinking milk laced with melamine in China by a company part owned by New Zealand dairy co-operative Fonterra.

A decline in packaging sales in Europe was driven by lower sales in Poland and Russia where juice drinks are regarded as luxury items and were therefore affected by the economic downturn.

"As with all of its past investments, Rank has focused SIG on de-leveraging since its acquisition," a presentation to investors said.

SIG decreased leverage from 6.1 times to 3.1 times earnings in 30 months through a combination of earnings growth and debt reduction, the latter being achieved by selling non strategic assets.

Carter Holt's paper mill in Whakatane got a small mention in the results presentation.

"We are making continued progress in adapting cardboard from Carter Holt Harvey's Whakatane mill for use in our cartons and we should enjoy first benefits of this during the course of next year," Mr Stangl said.

"The global financial and economic crisis continues to negatively impact our business primarily in Eastern European markets," he said.

But the improved macro-economic environment and new business opportunities were driving growth in emerging markets.