McPherson printing profit up 54%

The following is an excerpt of Mr King’s address to shareholders at last month’s meeting.

“The strong earnings result [of the company] for the year was underpinned by excellent performances by our printing businesses, which produced a combined profit before interest and tax 54% greater than the previous year.

“The result was, of course, enhanced by the acquisition of The Australian Print Group, making McPherson’s the largest book printer in Australia. Successful completion of the first stage of its integration with the McPherson’s Printing Group in Maryborough, Victoria, was achieved during the year.

“I would like to highlight to shareholders that, at the time of its acquisition, The Australian Print Group was in a state of severely declining profitability. However, as our due diligence investigations had identified in excess of $3 million in first stage productivity improvements, management was confident that the company’s return on investment criteria would be met.

“It is a tribute to both McPherson’s management and the Maryborough workforce that the productivity targets were met. McPherson’s is the largest employer in the Maryborough region and the long-term benefits to the local community of a more financially robust and efficient business have been clearly recognised.

“I would also like to acknowledge the performance in 2002 by our directory printing business, William Brooks, which produced another solid result. A major highlight during the year was the successful negotiation with Telstra of an extension until 2009 to the company’s supply agreement to print 50% of Australia’s telephone directories.

“Whilst the Telstra agreement extension provides William Brooks with a high degree of business certainty until 2009, the competitive nature of the negotiations has resulted in some aspects of the new arrangements not being as favourable as those previously enjoyed.

“However, offsetting this are a number of factors which will result in improvements to the Printing Division’s profitability. These include greater flexibility to undertake non-Telstra printing work at the Chullora directory printing plant, further profitable growth opportunities in other areas of our printing business and additional targeted rationalisation and efficiency gains. Non-Telstra work has already commenced at Chullora.

“In our printing businesses, the objective is to consolidate the gains made in 2002 and to produce in 2003 earnings similar to those of last year. First quarter earnings are well in line with these targets.”