Ovato sales fall by almost $100m, losses cut

Print giant Ovato saw its revenue fall by $96.6m in the 2021 financial year, while losses improved by a third, but the company still finished the year a whopping $67m in the red.

CEO James Hannan said the company was now pursuing a print-only strategy, and said that success will follow its actions, which have seen it shed all non-print assets.

Sales for the year were $442.7m, down by 18 per cent on last year’s $539.3m. Last's year's result was itself down by $130m, or 20 per cent on the prior year.

Net loss for FY2021, after significant items and income tax, was $67.1m, which was a 38.3 per cent improvement on last year’s $108.8m.

EBITDA was virtually the same as last year at $31.1m, down from $32.4m. Ovato reduced its net debt by 45 per cent, it is now just $39.8m.

Almost all the sales decline came from the Australia business, which took a $90m hit on last year. Of this $67.1m was from lower print sales, with catalogues down by $49.5m, magazines and newspapers down by $19.5m. Non-food and beverage catalogues fell by 38 per cent, mainly due to one of the bigger retailers cancelling its catalogues.

Residential distribution sales were down by 35.8 per cent or $21.7m on lower volumes as a result of “very slow” retail conditions in Covid.

Revenue in New Zealand was down by $6.1m, EBITDA was up by 69 per cent to $2.2m thanks to tight cost control and government Covid subsidies, which offset lower print volumes.

New CEO James Hannan said, “FY 2021 was transformational. We have and continue to make hard decisions necessary to ensure a sustainable future for the Ovato business. Our new management team understands the challenge we have ahead of us and are committed to the effort and excellence it will require.”

Ovato has just sold off its retail distribution business - formerly known as Gordon & Gotch - in Australia and New Zealand, and has also sold off its marketing services business, deals which will bolster the balance sheet.

Hannan said, “We are returning our business to a singular focus, and to the one thing we do best – print production. When we hold a shared and focused vision, success will follow."