Paperlinx blames European closures for A$266m statutory loss
By Pamela Mardle Friday, 24 August 2012
The loss posted in the paper merchant's 2011/2012 financial report was almost double the anticipated amount of A$171m predicted by the Paperlinx board prior to the publication of its annual review in June.
Paperlinx attributed the loss primarily to the board's decision to write-off all remaining goodwill on its European operations, which added A$119.3m to the initial underlying loss of A$54.4m.
Losses on the sales of the US and Italian businesses (A$62.4) and overall restructuring costs (A$31.1m) contributed to amass a A$214m pre-tax value of significant items for the 12 months to 30 June.
Paper volumes of 2.44m tonnes, 190,000 tonnes less than 2011, reflected deterioration in demand, particularly in Europe, according to the company. European sales of £2.3bn did not stop Paperlinx from making a A$23.6m loss in this area. Overall sales for all business areas dropped by over A$500m.
The company also booked a A$1.7m impairment charge to align the carrying value of its South African business to the price agreed in the contract with Finwood, which launched and MBO for the business in July.
The paper giant confirmed that plans to sell the South African business, as well as a number of South Eastern European operations to Heinzel Group, are expected to complete by December 2012 and generate a predicted A$90m in net cash proceeds.
Interim chief executive Dave Allen said that cash generated from this year’s asset disposals have provided funding for crucial restructuring and reduced debt to A$148m from A$214m since last year.
The strategic review was said to have delivered cash to drive costs out of the traditional paper business and diversify growth into areas such as packaging and sign and display.
Allen added: "The internal restructuring programme has been expanded and accelerated and we expect that total costs of A$45m will generate annualised benefits of A$73m by fiscal year 2014."
A further A$1.7m is to be spent on the European restructure, to reap benefits of A$59.8m by 2013/2014, according to the board.
Allen said: "While we have made significant progress over the year to transform Paperlinx, there is still much work to be done to return the company to operating profitably."
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