Chief executive Frans Koffrie said the paper market remained weak, with prices 3% lower than last years first-quarter levels.

"Our daily order intake for paper is showing no evidence of an upturn, or that one is likely," said Koffrie.

Buhrmanns paper merchants in the UK are the Robert Horne Group and Howard Smith Paper.

The paper merchanting divisions earnings fell 29% to 12m for the first quarter of 2002, with net sales down 5% to 483m.

Koffrie said the division had suffered from weak demand for colour print caused by the fall in advertising spend.

The market had also seen seriously low business levels and an increase in printer bankruptcies, all of which had hit results, he added.

The groups net profits were down 19% to 24m, while last years acquisitions of Samas and USOP helped boost net sales by 4% to 1.5bn.

Koffrie said that Buhrmanns merchants would continue to maintain supply in line with demand to avoid a deterioration of prices and margins.

"Customers and suppliers expect a higher level of activity later in the year, but we are not taking this as an upturn," Koffrie said.

Recent price increases announced by merchants had been put through to help improve margins, and were not due to increases in paper prices, he said.

"There are signs that these increases are sticking and we hope that this may help to improve paper price levels," he said.

Story by Andy Scott