The AUD60.9m net loss reported by the paper merchant was more than double the AUD26m net loss predicted by the company in its December trading and strategic review update.

Paperlinx said the AUD60.9m figure includes a non-cash impairment charge of AUD39.4m, which would have resulted in a breach of the company's debt covenants, had it not agreed an amendment to its debt facility with its main European lenders.

It blamed the results on a severe decline in paper consumption in the first half of the year, particularly in Europe, along with a stronger Australian dollar and weaker sales.

Paperlinx executive vice president Dave Allen said: "Excluding the non cash impairment charge of AUD39.4m, PaperlinX posted a AUD21m loss. This is better than the AUD26m underlying loss we predicted.

"These results reflect our exposure to the European economic crisis and the figures tabled above are a result of the global decline in paper consumption, compounded by falling prices in Belgium, the Netherlands and Luxembourg.

"The company has a clear plan for restoring profitability. This includes a program of asset sales and further restructuring, to reduce costs in PaperlinX’s central European business. This is in addition to continuing the growth already coming from diversified areas including the sign & display, digital and packaging sectors.

"The restructuring of the UK business in June 2011 is complete and is already delivering benefits ahead of forecast."

Earlier this month a group of Paperlinx investors representing around 5% made a bid to oust the company’s current chairman Harry Boon.

The group, led by paper and printing industry veteran Andrew Price, asked that Boon be removed because of "concerns at the way the business is being managed" and that Price be appointed as director.

In January it received a private equity takeover bid for the entire share capital, as well as for the Step-up Preference Securities, at a price of AUD0.09 and AUD21.86 respectively.