SHARES in ILP, the Leixlip-based specialised packaging company, tumbled yesterday after its chairman said he expected to report losses for the first six months of this year. The firm, which makes packaging for the computer industry, said a decline in demand among the major players in the sector had forced the profits warning.

The shares fell dramatically in London following the announcement, dropping 9 1/2p to 37p sterling before recovering marginally to close on 39p. In Dublin, the shares last traded a month ago at 53p sterling, but are due a sharp fall when they trade.

In a statement, ILP's chairman, Mr John Bourke, pointed to remarks he made at the company's annual general meeting in May about disappointing demand levels in the first quarter.

"Since then, a number of major electronics producers have commented on first-half weakness in their markets, particularly in Europe," he said yesterday.

"ILP, in turn, while experiencing some increase in demand in April, has seen no recovery in demand overall in the second quarter. Accordingly, we estimate a loss before tax, for the first six months this year.

For the six months to the end of June 1996, ILP made pre-tax profits of Pounds 400,000, which were somewhat lower than expected. In March, the company announced disappointing annual results, with pre-tax profits rising 10 per cent to Pounds 1.1 million, and sales actually falling slightly to Pounds 11.9 million.

Mr Bourke said ILP's customers continued to anticipate a stronger market in the second half of the year.

"In the meantime, we have significantly scaled back our expense base, in keeping with the current situation, and anticipate a profitable outcome for the year as a whole," Mr Bourke said.