Blue Star accentuates the positives in latest results

Chris Mitchell, managing director of Blue Star Print group, said that normalised earnings before interest tax, depreciation and amortisation (ebitda) increased 3.3 per cent for the group in the six months to 31 December 2010. Ebitda for Blue Star Group Holdings Limited, the ultimate parent of the issuer of the Subordinated Capital Bonds, increased 5.5 per cent. He said, “This is an encouraging lift in earnings performance and cash flow generation in a sector that is undergoing significant change to meet evolving customer demand.”

On a NZIFRS basis, the ebitda for the period under review was $25.3m, a 37 per cent increase over the previous comparable period. Revenue for the period under review was $293.3 million, down 0.8 per cent. Mitchell also mentioned the ACP Media New Zealand printing contract as an example of positive momentum for the company. He said, “Broadly, Blue Star is repositioning to take advantage of new opportunities and align the business with the changing needs of our customers. We continue to invest in the business where there are compelling investment opportunities, such as the new print facility in Auckland to accommodate the ACP contract, which will be commissioned in the next couple of months.”

He attributed the improved financial and operating performance to a repositioning of the business. He said, “The strategies the company has deployed to improve the financial performance of Blue Star Group are showing clear signs of traction. We have retained our strong market position. We have a modern asset base, loyal customers, positive cash flow conversion and the commitment of staff alongside the ongoing support of Blue Star’s shareholders and lenders. All these factors have combined to provide Blue Star with an environment which is conducive to ongoing transformation.”

Blue Star said that its sheetfed operations remain profitable in both Australia and New Zealand and are adapting to the reduced volumes, over capacity and resultant margin compression that persist in the industry.

Mitchell also mentioned the company’s refinancing package. He said, “Blue Star is delighted that it continues to enjoy the support of its senior lenders and major shareholder who have further demonstrated their confidence with a refinancing package. The refinancing package, that includes a further cash commitment from our shareholders, is dependent on a number of requirements which once satisfied will extend the current senior facilities from 2012 to 2015.”

The company said it will soon announce details of the revised package, including the proposed terms of the capital bonds refinancing. In the meantime the Blue Star board suggests bondholders and potential investors should take all of these factors into consideration when deciding to buy, sell or hold Blue Star subordinated capital bonds.

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