CPI profits slump as paper trials continue

CPI announced in February this year that it expected the June 2005 half year to be profitable, but has now issued a warning to shareholders of an expected loss. The cause is attributed to one of the biggest problems currently faced by the paper industry, the failure of producers to pass the rising costs of paper production onto consumers.

CPI is not the only paper merchant suffering from this trend, with PaperLinx shares plummeting earlier this year in response to the announcement of a similar 20 per cent downgrade in profit forecasts. This is combined with last week's shock announcement of the closure of Moirs Paper, one of the industry's longest established firms, a development also attributed to pressure from printers to keep paper prices down.

Company secretary Birol Akdogan confirms that the profit revision is reflective of the wider problems currently faced in the paper industry. “In line with other industry announcements, CPI has experienced a difficult June quarter as the cost of paper increased but was not passed through into selling prices,” he said.

Akdogan asserts however that it in spite of the financial difficulties faced by the company, he expects the full financial year to be profitable for CPI. “While industry conditions remain difficult, CPI remains confident that continued progress is being made in the company's recovery.”