Posts Tagged ‘report’

  • Cash-flow dries up for local printers

    A majority of the Australian print businesses included in the latest Printing Industries trends survey reported a shift into negative cash-flow territory, with average debtor days outstripping average creditor days for the quarter ending March 2013, according to the Printing Industries Association of Australia’s (Printing Industries) Printing Industry Trends Survey Report for the March quarter.

    The report found that the average debtor days (the time in which cash is collected from debtors) among respondents stood at 52 days, outstripping the average creditor time-frames (the number of days allowed by creditors within which to pay off debts), which stood at 40 days – implying an underlying industry cash-flow gap of 12 days.

    A number of large suppliers in the local printing landscape moved to tighten their credit terms with customers during the March quarter following the GEON collapse in February. While not suggested by Printing Industries in the report, this shift in the local industry could have contributed substantially to the first quarter cash-flow gap indicated in the survey.

    According to the report, the majority – 57 per cent – of respondents indicated they had experienced negative cash-flow for the March quarter, with only 15.9 per cent reporting a positive cash-flow for the period. Meanwhile, 27.1 per cent of companies reported a cash-flow neutral quarter.

    The release of the latest issue of the report for the March 2013 quarter confirms trading conditions in the printing and associated industries remained challenging.

    Hagop Tchamkertenian (pictured), Printing Industries National Manager for Policy and Government Affairs, said that the March quarter outcomes represent the twenty-first consecutive quarter where reported industry outcomes came in below expected outcomes for a number of key economic indicators. 

    The survey respondents reported net balance reductions in a number of pivotal industry indicators including production, orders, sales, selling prices, net profits, employment and overtime.

    It was also reported that both labour and finance was harder to obtain and there was an increase in the number of outstanding debtors. Cost pressures while present during the quarter with reported increases in wages and material costs continued their moderating trend.

    Some 91.7 per cent of survey respondents ranked ‘lack of orders’ as the primary barrier to increasing production levels, an outcome that is higher than the 86.7 per cent proportion reported during March quarter 2012.

    Despite these findings, the report also found that printing industry respondents are remaining positive about future economic prospects with a greater proportion of industry respondents expecting improvements to take place in general business conditions relative to those expecting deterioration, this, despite another quarter dominated by soft trading conditions.

    On the pivotal industry indicator of capacity utilisation rates, the March quarter results shows that 59.6 per cent of respondents were operating at capacity/activity levels of 70.0 per cent or over, an outcome that is higher than the 54.3 per cent of respondents who reported for the same period a year earlier.

    Tchamkertenian suggests that, over the outlook period, industry respondents are forecasting modest net balance improvements to take place in a number of pivotal economic indicators. Based on these forecasts the June 2013 quarter is expected to yield net balance improvements in orders, production, sales and net profits.

    Further falls in employment and overtime levels are also being forecast but expectations for investments over the six months to September 2013 in plant and machinery remain strongly positive, in fact, the March 2013 quarter forecasts are the most buoyant since December quarter 2005.

    The forecasts also point to continued but moderating cost pressures with expectations that wages and material costs will rise by lower net balances during the June 2013 quarter.

    For the individual states, the outlook for general business expectations over the next six months remains largely positive with respondents from New South Wales, Victoria, Western Australia and Queensland forecasting improvements on net balance basis, while respondents from South Australia and Tasmania are forecasting deterioration.

    Respondents from Western Australia reported the highest utilisation rates with 80.0 per cent operating at capacity utilisation levels of 70 per cent or more, followed by respondents from South Australia (70.0 per cent), New South Wales (62.2 per cent), Queensland (53.3 per cent), Victoria (53.1 per cent), and Tasmania (40.0 per cent).

    Most individual sectors within the industry are forecasting improvements or no change to take place in general business conditions during the next six months, while respondents form the Trade Binding sector are forecasting deterioration in business conditions. Over the outlook period the most optimistic sectors are Screen Printing, Security Printing and Graphic Arts Machinery and Supplies.

    Relatively higher capacity utilisation/activity levels were reported by the Labels, Folding Cartons, Security Printing, Other Packaging and Paper Converting, and Graphic Arts Machinery and Supplies sectors. However, considerable levels of excess capacity were reported in Trade Binding, Screen Printing, General Promotional and Commercial, and Books, Magazines, Periodicals and Newspapers sectors.

    With most sectors reporting either reduced investments or no change in plant and machinery, reported improvements were confined to the Labels, Books, Magazines, Periodicals and Newspapers, Folding Cartons and Screen Printing sectors during the six months to March 2013.

    With the exception of Trade Binding (forecasting decline), the sectors are forecasting either increased investment in plant and machinery or no change over the six months to September 2013. The most optimistic forecasts are being made by respondents from the Security Printing and Digital Printing sectors.

    Printing Industries suggests that while industry capacity utilisation rates need to lift further to reach more economically sustainable levels, the reported improvement during the March 2013 quarter is nevertheless an encouraging development.

    Long-term employment intentions continue to remain weak especially amongst the larger employers who are responding to challenging trading conditions by becoming more lean and efficient. Moderating cost pressures for materials and wages are also a welcome development in an operating environment characterised by downward pressure on selling prices.

    Tchamkertenian says that while industry forecasts for a range of key indicators remain positive some caution needs to be exercised due to a general poor forecasting record by industry participants over the past five years.

    “The highlight of the March 2013 quarter is that industry respondents remain optimistic about the industry’s future economic prospects as reflected by the positive sentiment concerning both general business conditions and the reported willingness to undertake further investments,” he says. “Following the collapse of some prominent industry participants in recent times, survey respondents are reporting increased activity and opportunities have started to flow their way, and some even expressed hope that it could lead to a turnaround in the sheet-fed market as a consequence.

    “The trend in printing jobs reducing in both quantity and value continued to be a feature of the market during the March quarter. Other respondents cited the high Australian dollar as being an issue by causing the price of imported goods competing with local production to fall, while some attributed the announcement of the federal election as having a negative impact on industry activity” he says.