Graham Reaney, chairman of PMP says that despite a drop in operating revenue, PMP’s newly transformed, low cost operating model has delivered strong net profit and cash flow.
While PMP’s EBIT dropped 12.6 per cent to $29.1m, the company’s print division saw a 13.2 per cent revenue decline to $269.5m, following a 14.7 per cent drop in print volumes in the six months to December 2009.
Putting a brave face on the figures PMP CEO Richard Allely says, “Notwithstanding this revenue decline, the Print division delivered improved operating earnings in the half, largely due to the cost savings initiatives announced last year. I remain confident that our Print business is now very well placed relative to its competitors to create significant shareholder value in the future.”
Revenues in its distribution business plummeted by two thirds, EBIT declining 65.7 per cent to $1.5m in the half, compared to the same period last year. The company says the operating result in Distribution for the six months to December 2009 reflects the legacy the business has endured in losing touch with its customers, forfeiting their trust and consequently losing market share, as a result of the catalogue pulping fiasco.
The Digital Premedia business saw revenues falling by 10.3 per cent, but PMP says tight financial management enabled the business to largely protect its EBIT result, which declined by only $0.3m to $1.9m.
Gordon & Gotch delivered an EBIT of $4.4m, down by 45.7 per cent on the previous corresponding period, largely due says the company to a drop in book distribution and unfavourable foreign exchange impact when compared to the contracted hedge rates.
In some good news PMP paid down $25m off its debt, ending the half year with net debt of $183.8m, down from $208.4m in June 2009.
Looking ahead, Richard Allely, CEO of PMP says while the potential for revenue growth will be limited in the second half of the financial year, PMP will continue to optimise the business and look for efficiency opportunities to deliver earnings growth. He says, “Beyond fiscal 2010, the PMP Group has enormous potential to generate good cash flows to pay down debt and reward our shareholders.”
Allely adds that he expects PMP to deliver an EBIT (before significant items) result for Fiscal 2010 in the range of $52m-$55m and predicts that net debt levels will continue to reduce to June 2010, subject to market conditions.
PMP’s long suffering shareholders look likely to receive a dividend in 2010.
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