No pick up yet for CPI

Market conditions continue to prove tough for paper supplier, CPI.

In a statement, the company confirmed that trading conditions had been “very patchy and difficult” throughout the year, and were continuing. “Unfortunately, rather than an improvement, we have seen market conditions deteriorate further. This particularly took effect from the time the federal election was called,” said the statement.

Other significant factors contributing to this difficult period are the short-term price spike that followed the interruption to the supply of market pulp caused by the Chilean earthquake this year, and the rapid decline and later recovery in the value of the Australian dollar in May 2010.

The combination of both these factors meant that margins have been reduced considerably, with gross profit falling by 4.7 per cent. This has resulted in a call to action from the company.

“The margin decline has highlighted the need for the completion of our previously announced warehouse rationalisation strategy,” said the statement. “This will take place over the next fourteen months (as leases expire) and together with other planned cost reductions, should yield savings of approximately $6 million per annum.”

According to the statement, CPI is not optimistic of a radical change in conditions: “The market remains difficult and patchy with little evidence of a strong economic recovery.”