Underlying profits were up by 8.5 per cent, on sales that
decreased by 2.4 per cent. The company's EBITDA in the year to June 30 2007 was $6.4m, up from $5.9m
in the previous year, while sales slipped to $317.4m, down from $321.8m.
However the company was badly hit by its legal dispute with
Stora Enso, which saw a $5.7m judgement go against it, and a $1.7m bill for
legal fees, on top of the $1.5m it spent on legals last year.
Together with depreciation this resulted in CPI making a net
loss for the year of $4.6m, compared with a profit last year of $4.1m. CPI is
appealing against the Stora Enso judgement.
The increase in underlying earnings
was driven by strong capital equipment salesand a continued focus on higher
margin products in papers and inks. The company said that whilst the trading
environment for the papers division remained difficult, higher margins coupled
with ongoing cost control delivered an improved result against the prior year on an underlying basis.
In his executrive summary managing
director Bernard Cassell said the difficult market conditions saw revenues
decline in papers, however this was more than offset by higher margins achieved
through a continued focus on value added products. The ongoing excess capacity
amongst paper producers around the world, a strong currency and a customer base
that is continuing to consolidate, were key drivers in low paper pricing.
Paper volumes declined by 1.8 per
cent against the prior year, with average selling prices falling by a similar
level. The volume decrease was more pronounced in New Zealand, which suffered due to competitive
pressures and a strengthening New Zealand currency.
Notwithstanding these difficulties
the papers division was able to improve itstrading performance on a year on year
basis. CPI's inks products continued to grow strongly due, says Cassell, to its
ongoing high levels of service and quality products. In addition, the group's
dedicated and focused technical sales personnel have been able to deliver value
added solutions and service to our customer base. CPI was successful in
securing a large volume inks tender, the results of which started to flow through
during the second half of the financial year.
After a quiet first half in which
it operated at an EBIT loss, the capital equipmentdivision delivered a positive full
year EBIT result for the second year in a row.
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at editorial@sprinter.com.au.
Sign up to the Sprinter newsletter