Ovato to close residential distribution business as letterbox volumes continue to decline

Ovato has announced further company changes with the Ovato Residential Distribution business to close on July 30, 2021 as print volumes for the letterbox market continue to decline.

The announcement comes as the company readies for two Extraordinary General Meetings later this month to decide on the sale of its retail distribution businesses in Australia and New Zealand to Are Media and its marketing services division to a Hannan family business.

In a statement to the Australian Securities Exchange, Ovato CEO James Hannan said costs from redundancy and leasing costs will be recovered well within the current financial year as the company avoids ongoing trading losses in a business where volumes have continued to steeply decline.

“The impact of the COVID-19 pandemic has seen volumes across our Australian residential distribution network fall sharply since early in 2020. While the business is committed to covering this impact, it is now clear that the volume the network requires is some way off and the business can no longer offer this support,” Hannan said.

The company said it continues to offer unparalleled national reach and speed to market via print sites in NSW, Queensland, Western Australia and South Australia.

In an earlier statement, Ovato has also announced it is splitting the sale of its retail distribution business in A/NZ due to timing issues with competition authority clearance in each country.

“Subject to receiving clearance by the ACCC, the parties currently expect to complete the sale of Retail Distribution Australia on 31 July, 2021 and subject to receiving clearance by New Zealand Commerce Commission, Retail Distribution New Zealand on by 30 August 2021 or as soon as possible thereafter,” the Ovato statement to the ASX read.

Under this arrangement the sale price will also be split.

The Australian retail distribution arm will be sold for $10 million with the New Zealand retail distribution business to be sold for $5 million.

The Real Media Collective, an industry association for the paper, print, publishing and distribution sectors, has offered its support to Ovato at this time.

“TRMC is aware Ovato has released an announcement yesterday, that as at the end of this month they will no longer offer Residential Distribution services across their business,” The Real Media Collective CEO Kellie Northwood said.

“This is part of a committed focus of Ovato which was communicated by their new CEO and Managing Director, James Hannan, last month. Ovato is right-sizing its business and maintaining a laser focus across all operations to build a strong and profitable print group.

“We provide all the support we can on this journey, our industry needs healthy and performing companies to offer stability. Whatever support the industry association can offer through this process we will provide.”

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8 thoughts on “Ovato to close residential distribution business as letterbox volumes continue to decline

  1. I have worked for Ovato formerly PMP Distribution formerly Progress Press for 32 years as their Contract Distributor in the North Gold Coast area. I employ 50 deliverers to deliver brochures into 28,255 residential letterboxes. I was terminated yesterday as well as all of my deliverers. This is my only income to live on and from 1st August I have income at all. It is the only income for my 50 deliverers. We are all devastated as must all the deliverers across Australia are. There is no offer of redundancy payment, gold watch, goodbye dinner for the huge amount of dedicated service that I have given to this company. 32 years is a very long time to work for one company. How many people can make that claim? It is very disappointing. Why couldn’t the distribution side be sold to another business and the letterbox distribution just continue on? Why just close it down and put thousands of people out of work? This is very upsetting and heartbreaking.

      1. What area did your son look after? How long has he been doing it for? What is he going to do now for an income?

    1. Welcome to our world, I also work for Ovato and got made redundant at Xmas after 30 years working for them with over 300 plus people lost their jobs and people are still suffering,as upsetting this is we all need to move on

      1. Oh, I am so sorry to hear about your career. How terrible! They are very mercenary about cutting costs and increasing their profits. They do no care about the fallout and how many thousands of lives have been affected.

  2. I have just read this story and believe me I sympathise with all who have lost their jobs. Man printer has commented ‘we all need to move on’. He’s right. If Ovato just closed its Residential Distribution business its because they couldn’t sell it, it had to be losing money.
    Deirdre you sound like a loyal hard working person, people like you are sought after in this country by employers. Keep your chin up and move on. I too have been made redundant in the past by a company involved in putting ink on paper. It’s becoming an increasingly difficult industry, however there is plenty of life in the printing industry, especially in businesses that are adapting to the technological revolution that is happening all around us. Best wishes to all the contract distributors who lost their jobs and their delivers.

  3. I worked for both PMP and Salmat as a business development manager 15 years ago, and when customers kept screaming for cheaper rates and both businesses didnt work together and draw a line in the sand for the health and sustainability of both businesses, it went to the dogs. Negotiating deals with animals like Woolies always leaves the back end suffering and this is the result, you cannot sustain rates of $24 per thousand they should have stayed at $45 when they both owned the market and both of them say go to Oz post for $125 per thousand. This is why they also sub contract all walkers, so they can cut them at any time without re course or pay outs. Very sad but its one of many when print is involved, there is no future in this anymore, go to another industry and transfer your skill set, it can be done and the weight of the world will fall off your shoulders

    1. Great reply. Very pleased to read it. I am 70 years old. No one is going to employ me now at my age. I thought that I had a job for life. Today my husband and I were approved for the age pension and health care card. It starts the day after the last distribution on 29th July. We will receive our first payment on 10th August. We were told 13 weeks so it has moved swiftly.

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