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PaperlinX has announced a full year net profit of $109m, down on its results of $132m in the prior full year. However, revenues jumped substantially to$6.2bn compared to $3.6bn previously. Operating cash flow remained strong at $403m, up from $234m in the prior year. Tom Park, PaperlinX’s Chief Executive Officer, says, "While the results show the effects of a difficult business environment, PaperlinX has achieved much over the past year, highlighted by the acquisition of Buhrmann NV’s paper merchanting division, on November 1 2003. This has established PaperlinX as the leading global fine paper merchant, building on our strong growth over the past four years."The benefit of this acquisition can be seen in the full year results, combining with our existing merchanting businesses and our unique Australian manufacturing business to provide earnings diversity geographically and by business stream. Despite this positive strategic move, our result for 2004 is a disappointing one, and does not fully reflect either the benefits gained from this acquisition or the hard work of our employees around the world. However, with a 7.5 per cent return on average funds employed, our results do compare creditably with our international peer group given the depressed 2003/04 environment.
"The major contributor to this disappointing result have been subdued global paper demand and weak international pricing exacerbated by the substantial rise in the Australian dollar over the past year and a half. Difficulties in meeting semi-extensible sack kraft market requirements also negatively impacted the result. These adverse factors had a particularly significant impact on the results from our Australian manufacturing business, Australian Paper.
"Our paper merchanting businesses have performed well in this difficult trading environment, holding overall returns on average funds employed above ten per cent (including acquisitions) and growing volume in all major markets.
"Buhrmann’s paper merchanting division, now fully integrated into PaperlinX, has met synergy and operating earnings targets, and has exceeded our earnings per share targets for the first eight months. The Paper Company, acquired two years ago, has met its target return on funds employed of 15 per cent one year ahead of plan.
"While 2004 was a tough year for PaperlinX, the platform we have established offers opportunities to improve our returns, with or without improvements in the external environment, as we continue to focus on synergies across our merchanting operations, productivity in all our businesses and identifying the appropriate balance of strategic investments to lift and secure our returns for the future. All of PaperlinX’s business segments are well positioned to improve their performance."
