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IPMG merger punishes PMP share price

Friday, 31 August 2018
By Patrick Howard

The loss of Coles catalogues along with the Pacific Magazine printing contract to IVE Group as a result of the IPMG deal saw PMP’s share price take a 13.7% hit on publication of its annual results.

The region’s largest commercial printing operation said sales were up $132.1 million to $734.0 million but when compared on a like for like basis with the previous businesses, they actually dropped by $108 million from $842 million. It posted a net loss of $43.8 million for the year.

Kevin Slaven, CEO PMP.

Acknowledging the task of bringing the two companies together had led to an increase in manufacturing costs, Kevin Slavin CEO in an executive summary, declared the integration was now complete. He declared the consolidation of the businesses was an important and necessary step that has helped settle the pricing and capacity issues that have long plagued the sector.

 As part of a plan to retire older inefficient presses and reduce overall print capacity PMP is buying a new manroland 80-page press for Warwick Farm to be installed in the second half of next year.

It maintains the new $20 million press will provide production efficiencies through wider web width, increased running speed and faster make-readies, and in addition cost efficiencies through reductions in labour, energy, and repairs and maintenance. Replacing older presses allows for a net reduction in our overall fleet capacity (circa 10-15%). It will be paid for largely through export credit funding with a four-year payback.

 In an upbeat report the company reported that print volumes as well as revenue from its top 20 retail customers increased with expectations of further growth in the coming year. Despite overall unaddressed volumes to household in slow decline, large retailers remain committed to catalogues as a key driver. PMP delivers to 6.7 million Australian households every week.

Citing an improved industry structure and realignment of capacity it predicts that heat set prices will stabilise. However falling print volumes for newspapers and magazines will likely offset the savings gained from the merger next year.

PMP New Zealand’s results were dismal with revenue down 6.8% to $120.1 million. Heatset volumes there dropped by 3.5% along with earnings, which were hit by lower selling prices.

 

 

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