The news that Ovato, the company formed in a mega-merger between the Hannan family’s IPMG and the former PMP Ltd in 2017, has entered voluntary administration has been greeted with sadness across the industry.

Sprinter contacted a number of printers with all expressing their sadness that it had come to this with many hoping Ovato would be able to trade out of the difficulties, get back on track and that all creditors and staff would be looked after.

Spotpress managing director John Georgantzakos attributed the situation to a continued slide in demand for catalogue printing despite its known advantages over the digital medium, as well as poor decision making by PMP management post-merger.

“Ovato’ s insolvency is the direct result of a continuous decline of the publication and catalogue printing sector over the last two decades as media consumption has steadily moved from print to online,” Georgantzakos told Sprinter.

“This trend is here to stay despite the known advantages of print over digital in terms of engagement and conversion rates.

“Twenty years ago, PMP and IPMG would have had a combined revenue exceeding $2 billion. Ninety per cent of that revenue has shifted to digital media. Today represents a sad day for both the publication and catalogue printing sector, for the key shareholders of Ovato as well as all the staff.”

Georgantzakos paid homage to the Hannan family for the work they had done over decades to build IPMG into a successful business which kept thousands of people employed.

“I also feel sad for the Hannan family that worked very hard to build a substantial business over the course of half a century and, in the process, provided an income to tens of thousands of families. Despite their best efforts the cards were stacked against them the moment they let themselves be acquired by PMP,” Georgantzakos said.

“Poor strategic decisions were made by the PMP management team that sealed the fate of the business. COVID, margin erosion, paper price increases and shortages compounded the underlying problems. Given that we are now living in a zero-unemployment environment, I am confident all Ovato staff will swiftly secure a second career in a growth industry, bringing along their skills and experience they have built during their tenure at Ovato.”

Georgantzakos also predicted a grim outlook for the future with a recession likely.

“As for any future purchaser of the Ovato business, they will face a market that will be negatively impacted over the next couple of years by an imminent recession in Australia. The industry experienced something similar in 2008-2009 during the GFC and the market was significantly larger back then,” he said.

At this stage it is business-as-usual at Ovato with FTI Consulting administrators running the business while they take stock of the situation.

The first creditors meeting will be held in early August with a second to follow around 28 days later where a full creditors report will be issued.

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