Australia earnings up but Europe remains weak point for Paperlinx

The global paper merchant’s $57.3 million net loss for the six months to 31 December 2012 was a 5.9% year-on-year improvement.

The paper merchant posted an underlying loss of $24.3 million, a 29.9% deterioration. It also booked $33 million of one-off costs.

Global revenue fell 17% to $1.4 billion, while the turnover of the Australia, New Zealand and Asia region fell by 13.2% to $218.4 million.

However, the falling sales in Australasia were offset by a rise in earnings.

Australasian volumes fell 13%, but "strong margin and expense control in Australia and New Zealand more than offset volume shortfall".

Earnings before interest and tax (EBIT) for Australia, New Zealand and Asia rose 36.8% to reach $7.8 million.

Australasia and Canada, now its only North American operation after the sale of its US business in June 2012, were credited with producing "strong performances", while the "key medium-term remaining problem areas" were identified as Germany, Holland and Belgium.

The group’s strategy of selling of assets, such as its US and Italian divisions, helped pay down debt, which fell 35% to $139 million. Its interest bill fell 29.8% to $6.6 million.

[Related: Paper buyers spoiled for choice]

Paperlinx forecast a return to profit in 2013-14 on the back of ongoing restructuring and growing the business.

It said it had put the funds in place to make it happen: total debt facilities are $435 million and the company's largest facility has been extended to September 2014.

Paperlinx plans to turn itself into a business that operates product-based divisions rather than stand-alone countries. There will also be a decreasing emphasis on the commercial print division, which has 30,000 customers worldwide, and a growing focus on packaging and sign and display.

Packaging, which generated 6% of sales, is seen to have "high growth potential over [the] long term", while sign and display, which provided 11%, has "low-to-medium growth potential". Commercial print will have to become learner "to suit the 'new normal' market conditions".

Chief executive Dave Allen said: "Although the loss is significant given the [$24.7 million] impairment charge, actions taken during the half have laid the foundations for Paperlinx to return to profitability in 2014.”

"Canada and Australia and New Zealand continue to be our strongest performers and we will take the learnings from these regions regarding a single brand-to-market to Europe and the UK.”

Paperlinx has been bringing all of its local operations under the Spicers brand.

[Related: Ups and downs of Paperlinx]


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