In a statement the company said that the cuts will cost AUS $3m to implement, but will deliver savings of AUS $13m.
The statement added the company was looking to make similar savings across its other European businesses to match demand, but "if restructuring costs cannot bring benefits, it will consider asset rationalisation".
According to a leaked internal memo circulated to staff from Paperlinx interim chief executive Dave Allen, the 200 UK cuts include 50 redundancies already planned, presumably referring to the closure of some UK sales offices and Delivery Co logistics centres and its corporate office in Milton Keynes in June.
"It is with great regret that we have to lose colleagues from the business but I can assure you this is absolutely necessary," said Allen in the memo.
He added that the cutbacks are a direct impact of the "an acceleration in the decline of Paperlinx’s core market in the past three months".
However, he went on to state that the company "would continue to invest in growth areas and in packaging in particular" where the company was seeing strong and consistent growth.
A spokesperson for Paperlinx confirmed that the company was in consultation with up to 200 UK employees, but said that the company could not comment further at this stage. In the UK, Paperlinx's merchanting divisions include Howard Smith, PaperCo and Robert Horne
The latest swingeing cuts follow a turbulent period for the loss-making Australian-owned business, which has included the exits of its chairman Harry Boon, chief executive Toby Marchant, Paperlinx UK director Paul French and Malcolm Lane-Ley, managing director of Paperlinx's commercial print division.
In August, the company’s 2011/2012 accounts revealed an AUS $266m statutory loss, which it blamed on the board's decision to write-off all remaining goodwill on its European operations, which added AUS $119.3m to the initial underlying losses.
To support the latest round of cost cuts, recently appointed executive director Andrew Price will relocate to Europe to "add weight to the restructuring efforts". Price was previously a fierce critic of former Paperlinx chairman Boon.
Current Paperlinx Chairman, Michael Barker said: "This new restructuring plan and Andrew’s appointment demonstrate our immediate priorities. We will continue to work to strengthen our already profitable businesses in Australia, New Zealand, Asia and Canada and direct the future of the Company towards a diversified range of products with growth ahead of them."
