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Hard heat-set web market to decide PMP’s full year figures.

Thursday, 15 February 2007
By Print 21 Online Article

Despite reporting half-year earnings (EBIT) of $50.1 million, down from the previous corresponding period of $54.2 million, Brian Evans, ceo, could point to a 52 per cent increase in net profit to $28.1 million due to ongoing cost savings. The print revenue, which is the largest part of PMP’s business, was down 2.8 per cent to $358.1 million, while the increased profit mostly came from the new MAN Roland presses getting into their stride. Along with increased productivity this also meant the company no longer had to outsource print at high prices to fulfil its contracts.

A rise of 4.7 per cent in print volumes during the period means PMP has won back much of the market share it lost while its capacity was constrained during the press installations, but much of it will be at the most competitive pricing.

“Generally speaking, the prices reflect the competitive market. This is to some extent a reflection of the overcapacity in the web heat-set printing market as a number of participants have recently added new capacity,” said Evans in an interview with
“Market conditions … will be the key factor that drives the second half EBIT higher or lower than expected. Already in the first half we experienced a generally flat market with increased pricing pressures.”

PMP still has the capacity to take on more high-margin spot work, although Evans maintains he still prefers long-term relationships.

Improvements in other parts of PMP’s business, especially in the Distribution division, which now includes both magazine distributor Gordon & Gotch as well as the catalogue letterbox delivery system, helped the bottom line with an $8.5 million EBIT. The controversial GPS-based letterbox delivery system will be rolled out to other states in this half of the year after being successfully trialled in NSW.

PMP’s prepress business, Digital Premedia, also increased its profit to $4.5 million, up from $1.9 million, while revenue jumped 27 per cent to $27.6 million. Showing that he is no slouch when it comes to ‘corporate speak’, Evens said, “We continue to ‘variable-ise’ the cost base of the business such that more of the revenue growth drops to the bottom line given that fixed costs are exactly that: fixed.”

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