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Reduced web capacity slams PMP

Thursday, 11 August 2005
By Print 21 Online Article

The region’s largest printer turned in a less than stellar result, due to a decision to decommission too many of its web presses ahead of its record capital equipment upgrade. Only the buyout of McPherson’s directory printing business kept the company’s operating results in the black.

While the printing powerhouse matching the revised forecast it delivered in April, a number of its other divisions struggled to make ends meet. While its marketing services powered ahead, PMP Digital faced heavy losses and its magazine distributor Gordon and Gotch also experienced a difficult year.

PMP CEO David Kirk concedes that in spite of the company matching its revised forecasts, the overall results were less than impressive. “Earnings in heat set web printing for the second half of the year were hurt,” he says, “by reduced capacity, lower average prices partly as a result of the mix, and costs associated with becoming over full in the plants.”

In spite of any disappointment relating to the results, Kirk argues the 2004/05 financial had progressed solidly in other areas. “Our capital re-equipping is proceeding on budget and on time, our letterbox distribution business has performed particularly well, and we have grown our New Zealand business substantially.”

An earnings-before-income-tax result of $72.1 million was achieved, with net-profit-after-tax rising to $35.9 million, an increase of 105.1% on the previous year’s $17.5 million.

The year delivered an operating sales revenue of $1,333.6 million for the company, up 9.8% from the previous year. Capital expenditure was $64.1 million, slightly below the $71 million target for fiscal 2005, while net assets increased by $39.7 million to $197.3 million.

PMP’s debt for the year clocked in at $291.7 million, slightly below its net debt target of $295 million. Earnings from its printing division remained essentially unchanged for the year, but would have experienced a slump were it not for last year’s purchase of McPhersons Printing’ directory unit for $16 million.

According to Kirk, PMP’s strategy to bounce back from its earning slump will be drawn from heat set printing. “Our new presses will help a great deal, as will a renewed focus on sales and operations planning and support cost reduction.” While Kirk emphasises that business is heading in the right direction, specific details or forecasts will not be provided until the AGM in November.

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