Turnover for the 12 months fell 5% to AUD$7.1bn, while volumes were down 14% to 3.6m tonnes. The loss compares to a profit of AUD$72.2m in 2008.

However, net debt was reduced from $1.1bn to $217m, which the company said represented the impact of recently implemented cost-saving measures.

These include the sale of its manufacturing business in Australia as well as a series of major cost reductions, including restructuring, headcount reduction and pay freezes.

In March this year, Paperlinx revised its working arrangements across UK operating merchants Howard Smith, PaperCo and Robert Horne, with staff offered a choice of revised working arrangements, which included reduced hours, two weeks unpaid leave and sabbaticals.

Dave Allen, Paperlinx regional president for the UK, said the year had been much worse than anyone could have predicted.

"Global paper demand has deteriorated by up to 20% in the second half of our financial year," he said. "Paperlinx has taken a series of initiatives to mitigate against this difficult trading environment and to help position our business for the future."

Since the sale of the Australian papermaking division, Allen said he was "confident that we are in a position now to see the net benefits of the actions we have taken to reduce costs".

However, he added that, although he did not expect the next six months to bring any significant improvement, he was hopeful that conditions would start to pick up during 2010.