Falling tissue paper prices are sending this Australian company's shares down the toilet

A prototype model of a Hello Kitty branded toilet seat in Tokyo. YOSHIKAZU TSUNO/AFP/Getty Images

Shares in Asaleo Care, the maker of tissue products including toilet paper, dropped hard in early trade on the ASX.

A short time ago, they were down 30% to $1.48.

The company just posted its half year results showing a drop in profit because of discounting by competitors.

And higher pulp costs, from which its tissue products are made, are also squeezing margins.

Asaleo says its full year profit is likely to decline by about 15%.

“There has been increased competitive intensity in the marketplace resulting in unanticipated price deflation in the retail toilet tissue segment,” the company says.

The intense competition is also been felt in the Australian feminine care and NZ Baby Care markets with significant discounting.

Revenue for the six months to June was down 4.3% to $292.7 million and statutory profit fell 23.4% to $24.9 million.

“Whilst it is disappointing to announce reduced results and outlook for the full year, we continue to believe that the strategy and initiatives which we have implemented and planned will put the company in a strong position going forward,” says Asaleo Care CEO Peter Diplaris.

The company says paper pulp costs will likely decline in 2017.

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