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Promentum ‘blames’ PMP for sales revenue woes

Thursday, 28 September 2006
By Print21

Following the departure of CEO Alistair Hill, who left in July, Promentum has signalled a more restrained attitude to industry takeovers, preferring to concentrate on wringing the most from its existing capacity.

The stellar rise of the consolidated company, which now claims 10 per cent of the $1.9 billion Australian sheetfed printing market, was based on Hill’s aggressive acquisition strategy over the past 18 years. It culminated in Promentum buying PMP’s sheetfed printing business in return for 26 per cent equity in the company, and in the acquisition in April this year of Scanlon Printing in Queensland.

Although overall sales for the company of $172.3 million were up on last year’s $139 million, they fell short of the budgeted $184 million. It seems the shortfall came about due to PMP’s ‘slippage in sales volume’, especially in non-contract business. This is attributed to the unusually long Easter holidays and reductions in customer marketing spend towards the end of the financial year. Promentum is satisfied it was a one-off occurrence and confirms that demand has now returned to expected levels.

Much of the sales shortfall and significant losses took place in Queensland where Promentum was commissioning its Ormeau plant between the Gold Cost and Brisbane. High profile industry identity, Tony Scanlon is now the Queensland general manager, after selling his Virginia-based Scanlon Printing and inner-suburb Octane digital print operation into Promentum. His strong management practices are cited as the basis of his group’s success in Queensland over 13 years.

In its annual report Promentum, under executive chairman Ian Elliot and interim CEO, Ian Parker, was at pains to point out that despite the lower than expected business coming through, PMP had complied with all its contracted obligations and is still committed to the strategic rationale which formed the basis of the relationship between the two companies at the time of the acquisition.

Between June and August this year Promentum reduced its workforce by 10 per cent, or 75 employees, and is aiming for $5.1 million cost savings this year. It confirms that its primary focus is now to operate existing businesses to the limits of their potential, while scrutinising acquisition opportunities for their ability to leverage our existing resources and thus maximise returns for our investments to date.

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