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Salmat takes a slide

Monday, 22 August 2011
By Print21

Acquisitions and one-off costs have dragged Salmat’s profits down by more than 25 per cent for the full financial year.

In light of the company’s slide over the financial year, the direct marketing company has published its senior executives’ remuneration with its 2010-11 accounts, many of which have dropped in line with its profits.

Despite a pay cut of 10 per cent to $1.47m, Salmat CEO Grant Harrod has stressed that the company’s figures reflect a larger investment strategy that he hopes will come to fruition during the coming year.

Due to investment spend, acquisitions and closures, company profits for the year were down by 26.8 percent on last year’s to $36m. Sales revenue also dropped 1.8 per cent to $863m.

“It’s been a year of investments for Salmat,” says Harrod (pictured). “We’ve invested in strengthening our traditional businesses as well as building out our digital communication strategy.”

The company has pointed to acquisition transaction and integration costs, restructuring and contract closure costs, and site relocations as being partially to blame for the profit drop.

Salmat’s Business Process Outsourcing unit, which produces print and mail work for large clients, not only received a 6.3 per cent dip in revenue for the year to $318.5 m, but also took a hit in pre-tax earnings to $41.8m – down 4.3 per cent. Perhaps the hardest hit was the company’s Customer Contact Solutions unit, which had a 20 per cent drop in pre-tax earnings for the year to $16m.

According to a company statement, the drop in its CCS unit was “impacted by the closure of contracts and costs relating to these contracts. Costs were also incurred to restructure and revitalise the Direct Sales, e-learning and Speech Solutions businesses.”

The four digital marketing companies Salmat bought from Photon Group in December last year have been folded into its digital arm, Targeted Media Solutions, which had a 4.3 per cent surge in pre-tax earnings, despite the companies underperforming predicted targets.

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