Paperlinx CEO Andrew Price says “the medicine is working,” with the company posting smaller losses in this year’s report thanks to massive structural overhauls. FY2014 saw the paper seller make a loss of $63.6m, 31 per cent lower than its loss of $92.8m for the previous year. It also posted an underlying EBIT loss of $7m, far better than last year’s $24.2m, and was actually in the black during the second half of the year at $2.6m. Paperlinx currently has operations in three continents, and reports ‘strong performances’ in its Canada and ANZA regions, and ‘improvements’ for its European business, which made a loss.
Andrew Price, CEO of Paperlinx
Revenue for the Australia, New Zealand and Asia market – which propped up losses in Europe in the half-year results – remained stable, down one per cent as the commercial print industry contracts, but EBIT increased 21 per cent to $15.3m. The company’s Australian subsidiary Spicers is the second biggest paper merchant in the country. Price says while sales volume is down for the whole business, selling at higher prices and focusing on higher margin products is improving its bottom line. He attributes the comparatively strong second half to the massive restructuring programme taking effect, on which the company spent $34.4m this year and $26.5m last year, and a weak first quarter in Europe. He says trading conditions remain challenging around the world, and the company will continue to shake up its merchant model and diversify for the long term. He says, “We are walking away from business that does not make sense. There seem to be plenty of others who want to take our place as we exit low-margin and unprofitable areas and they are welcome to it. “We have continued to lower our cost base through aggressive restructuring and achieved a drop in trading expenses by 11.9 per cent in constant currency. “With this cost benefit, and by focusing on margin improvements and product innovation, we are progressing towards sustainable profitability.” Paperlinx is diversifying away from commercial print, focusing on growing markets like packaging materials and pre-made cartons, boxes, trays, and sign and display, which now make up about 9.4 per cent of total sales. It also sells wide format and screen printing and finishing machines from a variety of brands, along with the consumables, software and accessories – now accounting for 11.3 per cent of sales, buoyed by growth in outdoor advertising. While Price says the balance sheet indicates the company is ‘doing the right thing,’ the restructuring has resulted in hundreds of jobs cut, mostly in Europe, to streamline the business and reduce duplication. Price believes momentum from 2014 will continue into next year and says the company will continue along this path with the goal of becoming profitable soon. He says furthering restructuring efforts will depend on ‘where the market goes,’ and keeping the cost base and product mix ‘right.’
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