|Sales revenue (US$ million)||841||1,078|
|Earnings before interest and tax (US$ million)||29.6||40.2|
|Sales volume (’000 tonnes)||508||623|
We offer a wide variety of paper options and graphic system solutions to printers and graphic customers across the continent.
PaperlinX North America is a leading US West Coast and Canadian fine paper and graphic arts merchant distribution network, with six operating companies.
Overall volume growth of 23 per cent was strong, boosted by the inclusion of Spicers Canada, with each operating company facing differing market conditions. Proprietary brand growth of 18 per cent has lifted the total volume sold through our own paper brands to over 25 per cent of total volume. This was in a market where overall demand was mixed at best, with conditions in 2007 generally softer than those seen in 2006. Pricing was generally positive in the US given continued capacity reductions in North America and the weak US dollar, however, Canadian pricing remained under pressure from currency. Average price realisation was up 4.6 per cent across North America, assisted by improved product mix.
The 36 per cent growth in operating earnings reflects the earnings leverage to improvements in the operational environment along with the inclusion of Spicers Canada. The acquisition of Spicers Canada has been highly accretive to earnings with a very successful integration into our North American business platform. The upcoming Toronto warehouse consolidation will create another layer of opportunities for enhancing returns which have already exceeded year 3 acquisition targets (+15 per cent ROAFE).
PaperlinX North America had a good result in its management of working capital through 2007, with working capital 6 per cent lower than in the prior year and a good fall in the working capital to sales ratio. Success in this area helped PaperlinX North America to grow returns further.
PaperlinX North America is continuing to adapt to meet the changing competitive landscape, with a range of strategic and management initiatives aimed to further build on their competitive advantages and provide customers in various product segments with enhanced service offerings.