Vice-president of Paperlinx Europe Dave Allen said that, while he is cautiously optimistic about the year ahead, there are still hurdles to overcome.

"Overcapacity both at the manufacturing and production end of our industry still remains a big issue," he said.

"Paper mills are trying to regain some level of stability following a significant impact from the devaluation of sterling versus the euro which, for many manufacturers, made the UK market simply unsustainable."

However, he claimed that the gradual return of some credit insurance into the market was welcome news for printers and suppliers alike.

Last year, Paperlinx announced it was to exit paper manufacturing by closing its Tasmanian Wesley Vale operation and part of its Burnie operation in Australia, in an attempt to lower debt and reduce costs.

The company has also merged its Europoint and Robert Horne Sign & Display businesses.

Allen said it has put the merchant in a much stronger position to build its business for the future. He said: "I am excited about the opportunities we are already seeing from our new growth areas, such as packaging and litho consumables.

"I'm also confident that our three UK merchants – the Paper Company, Howard Smith and Robert Horne – are doing everything they can to provide a stable platform for recovery throughout 2010."