Paper merchant first-quarter bad debt set to improve in 2011

By Helen Morris Monday, 18 April 2011

Paper merchant bad debt in the first quarter of 2011 is expected to stand at £2.99m, a £1.9m improvement on the same quarter in 2010.

NAPM president and Denmaur Independent Papers' managing director Mike Gee said: "The 2010 results are largely down to the knock-on effect of the recession and banking crisis of 2008 on 2009.

"The companies that have come through are now stronger and stand in better stead, although there are still some large companies out there experiencing challenges."

The figures were announced by the National Association of Paper Merchants (NAPM) at its annual dinner on 14 April, where the body warned that alongside this total tonnage volumes in 2010 decreased by 5.2% on 2009, following a 9.2% decline between the 2009 and 2008 totals.

The past quarter was "particularly weak", being some 10.7% down on the same period in 2009.

According to the organisation, if the sector carries along the same route as per the start of this year, it will soon have lost 25% of its tonnage and 25% of its people since 2008.

The total value in pounds for paper sold through paper merchants in 2010 was 2.6% up on the previous year, with average prices in December 2010 14.3% higher than in December 2009. 

Woodfree coated experienced a reduction of 2.1% on the previous year, with sheets falling by 1.6% and reels by 3.0%.

These figures show a smaller decline on the previous figures, and "may provide a small glimmer of light", according to Gee.

Sales of cut sizes through the merchant channel experienced a drop of 7.0% in volume terms when compared with the previous year.

Woodfree uncoated tonnages fell in total by 5.5%, made up of a sheet decline of 6.0% and 4.8% on reels.

Gee said: "Along with these horrific figures, people have become more cautious.

"The challenge is to ensure the industry's profitability in a market which in tonnage terms continues to decline."

He added that the sector was emerging slowly from the recession with moderate growth and higher unemployment.

"The much-needed spending cuts and tax rises are likely to ensure the recovery is, at best, at a very modest pace, some economists believing the situation to be very fragile," he said.

The publishing and board sectors showed a more positive path for merchants in 2010. The board division reported growth in volume terms of 7.3%,