Sales revenue was posted at $3.62billion, up 22 per cent over the prior year; while profit after tax reached $132.1million, up seven per cent. However, earnings per share was down three per cent at 36.9 cents, due to the company maintaining low gearing in the expectation of further growth. Final dividend was maintained at 14 cents per share on a higher capital base, 50 per cent franked, making a total dividend for the year of 27.5 cents.
Further on the downside, Australian Paper communication papers division’s sales revenues dropped five per cent in sales revenue. According to Tom Englesman, PaperlinX CEO, competitive overseas prices were partly behind the drop, although an internal focus on lowering its operating costs and further product innovation over the year kept the company competitive.
“Prices were under severe pressure exacerbated by a stronger Australian dollar which reduced the price of imported paper which we compete against,” says Engelsman.
“While it was a difficult year we were able to develop all our brands and Reflex had another additional product added to its range as it maintained its position as Australia’s leading copy paper,” Engelsman said.
According to PaperlinX, the success of this financial year can be traced to the successful integration of The Paper Company in the UK and Ireland, producing returns in line with expectations and the restructuring of the Company’s New Zealand paper merchants. The announced offer to acquire the Paper Merchanting Division of Buhrmann NV; and the subsequent placement of $239 million of shares to institutional investors as a part of the funding for the potential acquisition also had some bearing, although the true impact is expected to be felt in the 2003-2004 financial year results.
Despite the apparent positive nature of the company’s results, Ian Wightwick, PaperlinX managing director, warned that a great deal of uncertainty still persisted in the short term, particularly in Europe, which may prove to be a challenge to the company’s acquisition of Buhrmann’s paper merchanting arm.
He says the company intends to reduce costs by upgrading and expanding its pulp manufacturing in Gippsland in Victoria, thereby reducing its pulp importation which last year accounted for 30 per cent of its total pulp requirements.
“Economic conditions in the paper market in Europe are under considerable pressure – this has been impacting on short term earnings and we do not perceive any near term improvement in European activities,” says Wightwick.
“However, we continue to believe this acquisition will be earnings per share positive in the first full year and there is considerable earnings upside in the future.”
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