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Magazine volumes downgrade PMP earnings

Friday, 16 February 2018
By Print 21 Online Article

A fall in magazine and newspaper volumes has led to another earnings downgrade by the region’s largest printing company.

 In a Revised Guidance announcement to the ASX on Wednesday, PMP says earnings for the first half of 2018 are expected to be $20.2 million – or $3m-$4m below previous expectations.

Based on the three months trading since the previous guidance, PMP’s revised guidance for FY18 is now $40m-$45m EBITDA.

In November, PMP shares fell by more than 31% – from 77c to 47c – after the company warned that higher volumes of short run work had contributed to a $20m downgrade in profit forecasts for FY 2018, from between $70m-$75m to between $50m-$55m, a fall of about 28%.

The company blamed a decline in magazines and newspaper volumes for the latest downgrade:

Whilst overall print volumes (collectively for catalogues, magazines and newspapers) are in line with what has previously underpinned guidance, and noting that all cost initiatives are largely being met, the revises guidance is driven by a reduction in expected volumes of higher margin magazines and newspapers (offset by higher than expected volumes of lower margin catalogues).

Since PMP’s $120 million merger with IPMG last year and IVE Group’s acquisition of Franklin Web and AIW, the Australian heat-set printing industry has consolidated from five to two players.

PMP says that while it remains confident that the changes to industry structure and its continued focus on costs will provide the opportunity to improve profitability over the medium term, it recognises ongoing challenging conditions in the retail, publishing and newspaper industries.

On Thursday afternoon, PMP shares were trading at 36 cents.

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