Red Paper takeover boosts CPI debt

Net debt of $58.8 million compared to $21.2 million the previous year is the cost of effectively doubling the company's size in Australia.

CPI reported a net profit of $3,308,000 for the year ending 30 June 2008, but the result was increased by the return of $5 million damages from the successful appeal against Stora Enzo in a long running court case. Declines in paper volumes in Australia with downward pressure on prices told a story of hard market conditions.

A slowdown in capital equipment in the run-up to drupa dented an initial strong start in machinery sales, according to Bernard Cassell, managing director.

"The difficult market conditions saw volumes decline in papers," he said. "Excess capacity was evident in most of the industry, leading to continued downward pressure on pricing for most of the year.

"After a strong start there was a significant tightening in the market for capital equipment in the second half. Capital equipment orders from drupa were strong and are expected to be reflected in the first half 2008/9 results."

Inks proved a successful area, helped by the acquisition of the Choice Inks business in January this year.

Looking to the future, Cassell predicted that paper price rises were imminent.

"The weakening Australian dollar, combined with higher global paper prices are likely to result in increases in paper prices in Australia," he said. 'It is expected that difficult trading conditions will continue into 2009."

Cassell added that CPI would focus on machinery, inks and other niche product areas as a focus for profitable growth.