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Good times get rolling for PMP

Thursday, 09 November 2006
By Print21

PMP is confident its EBIT for the second half of 2006 will exceed last year’s figure of $40 million, with the company well on its way to meeting the market consensus forecast of $48 to $52 million. Brian Evans, chief executive of PMP, says he expects the good times to keep rolling in spite of trading conditions remaining competitive, particularly in the print and distribution.

“PMP is on track to consolidate and grow its position as Australia’s and New Zealand’s leading print and distribution company. Across the board PMP’s businesses are competing in their respective markets with an improved cost position and innovative offerings,” says Evans.

“Since the beginning of the current financial year, we have continued our disciplined assault on PMP’s cost base, adding to the $18 million in cost savings achieved during 2005/06. Further efficiency improvements have been realised which will help to counter the ongoing pricing pressure and inflationary cost increases in our competitive market place.”

As restructuring continues for the company, PMP appears confident the structural changes will continue to keep the benefits flowing. PMP has confirmed it was approached by private equity in March and April this year, leading it to appoint Gresham Advisory Partners and Blake Dawson Waldron to assist with the process. The private equity talks were ultimately suspended as until the restructuring had reached a latter stage.

“The Directors of PMP took the view that engaging with private equity at the time these approaches were made would not be in the best interests of PMP shareholders as the benefits of the restructuring programme were just beginning to flow,” says Graham Reaney, chairman of PMP.

“The full value impact of this restructuring programme would not have been reflected in any offer price at that time. Another value adding project is the new distribution system that is only now becoming fully operational in Sydney and will be rolled out nationally by April,” he says.

“It was with the understanding and reluctant acceptance by private equity that discussions were deferred until greater certainty of the financial impact of these changes could be determined.”

PMP is quick to emphasise there is no certainty a private equity proposal will be forthcoming, or if one is actually made that it will be accepted. The company is currently preparing information for presentation to private equity and expects this to be released later this month and expects to receive indications of price and any associated conditions following that.

“Both the board and management are keen to resolve the situation in as short a period as possible, to remove ownership uncertainty from both the Stock market, and business management view points,” says Reaney.

Brian Evans has now been in the CEO seat for a little over a year. Immediately after his arrival last October a restructuring programme was implemented that PMP claims resulted in $18 million of cost savings mainly in the second half. Cost reductions and the commissioning of the new MAN Roland presses are pointed to as the main contributors to the profit turnaround.

PMP is now in the final year of its three-year plan, the emphasis now on optimising plant performance and improving customer service, as well as the rolling out its much-touted new GPS delivery system across Australia. It claims to have recovered the print volumes it lost during its controversial decommissioning phase while it was waiting for its new presses to get up and running, and is seeking more work as it pursues a mix of long term print contracts and high-margin ‘spot’ work.

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