The merchant recorded revenue of AUD$3.78bn, which it said is in line with the previous corresponding period, despite volumes being down 7% to 1.97m tonnes.

Paperlinx said its results had been influenced by the decision to sell the Australian manufacturing business, divisional operating earnings of AUD$92m, and foreign exchange impacts.

However, despite the "significant loss", the company claimed the sale was an important step to secure its financial stability.

Regional president for the UK, Ireland and South Africa, David Allen, said the results demonstrated a "strategic shift" from a combined mill and merchant group to a business focused solely on merchanting.

While there was a write-down on the mills following the sale to Nippon Paper, Allen said the merchanting business was continuing to perform well despite the tough economic environment.

Its worldwide merchanting business achieved an EBIT of AUD$77.2m in the six-month period to December 2008, down 20% on the previous year.

Allen said: "In the UK, these results will enable us to continue to invest in our three operating companies – Howard Smith Group, Robert Horne Group and The Paper Company – to ensure we maintain the depth and breadth of products and services we offer to our customers."      
   
Earlier this month, Paperlinx agreed to sell its Australian Paper business for AUS$700m to Japan-based Nippon Paper Group.

The sale excludes its two Tasmanian mills at Burnie and Wesley Vale, but a review of these operations will be completed over the next few months that could see the sites sold or closed.

Paperlinx said this has been the most challenging period in the history of the company, which has been making paper in Australia since 1926 and distributing paper in Europe since the 1600s.

Also see: Allen takes on Paperlinx UK top role

Paperlinx group to raise prices