Spicers annual result has been dragged down by its struggling Australian commercial print industry figures, with its profit before interest and tax plummeting by 59.7 per cent from $3.8m to $1.5m on overall sales that fell 3.1 per cent to $380.7m.

Spicers says the Australian sales revenue for FY17 was down 4.3 per cent from $211m to $202m primarily due to declining volumes and tough trading conditions in the commercial print category. The drop in sales in commercial print was softened by strong growth in sign and display.

Across the Spicer operating territories of Australia, New Zealand and Asia print and packaging sales were down by 6.7 per cent to $303m, while sign and display sales were up by 14.3 per cent to $77.3m.

Again it was in the Australian market where Spicers struggled with downward results, while New Zealand grew by four per cent. Asia also slipped, by seven per cent to $78m.

The underlying EBIT for the Australian sector was 44.6 per cent lower than the prior corresponding period (PCP) due to the structural decline and challenging trading conditions in the commercial print market.

[Related: Spicers raise prices, Ball & Doggett wait]

Spicers says while FY17 trading expenses were down on PCP, expenses as a percentage of sales were marginally higher than PCP due to overall decline in sales revenue. Against a backdrop of ongoing structural decline in the commercial print category, restructuring and rationalisation of some activities in the Australian business was announced on June 26, reducing operating costs going into next financial year.

Spicers full profit after tax plunged from $5.3m to $1.7m, it says this drop is attributable to one off benefits in discontinued profit after tax results in the respective periods, both of which were predominately related to the groups previous operations in Germany.

David Martin, CEO at Spicers says, “While volumes continue to decline and trading conditions remain tough in our commercial print markets, it is pleasing to report that we have been able to deliver an increase in group underlying earnings with good results from our New Zealand and Asian businesses and a reduction in continuing corporate costs as activities continue to be rationalised.

“I am also pleased to be able to confirm an operating cash inflow of $6.3m for FY2017, with the Australian business in particular delivering a significant turnaround on the prior year due to a strong focus on cash and working capital.”

Profit after tax from continuing operations $400,000 compared to $1.5m PCP decline due to impact of restructuring costs of $2.1m related to warehouse rationalisation and headcount reduction.

Spicers underlying EBIT came in at $4.9m, 8.1 per cent higher than prior corresponding period (PCP). Consistent with prior years seasonal factors of higher sales in the months leading up to December followed by slower sales in January and February, mean FY17 first-half underlying EBIT results of $3.3m was higher than the second half results of $1.6m.

Continuing sales revenue of $380.7m was 3.1 per cent lower than PCP which was at $325m. Sales revenue was down with structural decline in commercial print revenues offset by strong growth in revenue streams.

Sales revenue from print and packaging categories declined by 6.7 per cent, while packaging related revenue streams grew in FY17. This was due to a combination of lower volumes in line with ongoing structural decline in paper markets and changes in sales mix in some locations.

Sign and display revenue streams grew 14.3 per cent year-on-year, due to strong sales effort sand organic revenue growth in Spicers’ main Australian and New Zealand sign and display markets.

Martin says, “Our changed approach to portfolio and product segmentation has delivered profitable growth in sign and display and other diversified categories, while we continue to focus on maximising our positions and returns in our print and packaging markets. I am confident this approach will also bring future growth opportunities as we move forward.”

Last July, Spicers revealed it would be raising the prices of a number of its stock including Precision Laser, Pacesetter Laser Recycled, Core Boxboard and Teslin. Manufacturers worldwide, especially out of Europe and Asia, have raised their prices on papers and boards purchased by Spicers as their input costs rise.

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