The Australian paper group made an AUD 53.1m pre-tax loss on revenue of AUD 1.5bn for the six months to 31 December 2012, compared to an AUD 56.4m pre-tax loss on AUD 2.2bn sales in the first half of its 2011/12 financial year.

Paperlinx chief executive Dave Allen said the "poor results" reflected "legacy operating structures in Europe" adding that the group's AUD 13.7m underlying EBIT loss (H1 2011/12: AUD 9.6m loss) was "largely due to the UK & Europe".

Europe's underlying EBIT loss was €15.9m versus €4.1m in the prior year, the majority of which was said to be due to Benelux and to a lesser extent Germany. The UK's performance was said to be down on the prior year "due to market decline and loss of market share", which Carr said was around the level of the group market share loss of 10%.

"With all the restructuring people have been looking inwardly rather than outwardly and that's allowed our competitors to take some market share," explained Carr. "We are still by far the largest paper merchant in the UK [so] for us a 1% loss of market share translates into a significant amount of volume and revenue and we need to take that back."

Despite the bad news, the interim results were not without positives, such as the extension of the group's European finance facility with ING until 30 September 2014, with no material changes to the prior agreement.

Furthermore, with the UK having booked the "lion's share" of the group's first half AUD 6.4m restructuring costs as it consolidated the sales forces across its three operating companies down to one - with the loss of 200 positions - Carr said the UK would face much lower costs in the second half.

"We're on track to take those 200 positions out by the end of June, which will take us from approximately 1,600 heads in the UK down to 1,400," he added. "We won't have that level of restructuring in the second half."

Paperlinx expects to book some AUD 20-25m restructuring costs worldwide in FY2013, leading to cost savings of AUD 35-40m in FY2014. The group said there was "significant value" in investing in the turnaround of its loss-making UK and Benelux operations.

Carr was optimistic about the second half, in which one focus will be to reclaim market share lost as a by-product of the group's restructuring.

"Although the results on the face of it are not great the fact is we now have an opportunity for the future because the restructuring has not simply been about taking cost out to reflect the changing market conditions, it's been about fundamentally changing the way the organisation operates," he added.

"By the end of this month we will have just one sales force, down from three in mid-November, and to have done that across all our UK businesses in that timeframe has been a quick turnaround. Our objective has been to move toward a much simpler, leaner organisation that is facing the customer only once.

"Our customers' needs are changing quickly and we need to be able to respond to that and having one sales representative with total ownership of one customer and the ability to offer the full range of products in the UK to that customer is a bonus for them and for us.

"That's why I'm excited about the potential going forward both as a group and in the UK."