I definitely feel bad for the employees of Paperlinx UK. Hope they can get on their feet again soon. Brings home that the stocks we invest in are not just ticker symbols but real businesses with real employees trying to provide a needed service the best they can.
I am no expert in this but I believe management (in recent times at least) have done they best they could given industry conditions. From my records from annual reports Europe sales have dropped from 2.7bn in 2011 to an estimated 1.8bn in 2015, a drop of 932m. Assuming 20% GP margins (average over years) this equates to 186m hit to profit. Underlying profit went from a 6m profit in 2011 to an estimated 45m loss in 2015, a drop of 51m. Due to the high fixed cost nature of the business I believe this means a huge amount of costs (around 135m a year) have been taken out of the business over the years but this just wasn't enough. I estimate there have been at least 90m of restructuring costs to achieve this which was mostly funded by sale of other operations. To save Europe would probably mean another 90m which would require the sale of the Australian operations and going 'all in' on Europe which is gamble that board and shareholders cannot afford to take.
We too have suffered in this saga. From a (combined PPX and PXUPA) market value in 2011 of 176m to a current 29m means as a group we have lost 113m in just 3 years with much more lost in the previous 3. Very interested to see the announcement to be released on the 8th which might gives us more information on how this plays out. Suspect once the dust settles there will be another fight between the two share classes to split what remains.
