PMP also chopped its debt by 20 per cent to $168.1m, down from $208.3m in June 2009. Overall revenue was down 10 per cent to $1.121bn for the year.
It was the printing division that was the standout performer. While the group was hit with a 13.4 per cent decline in print revenues, due to a loss of low margin work to competitors and reduced print frequency, the division’s earnings increased 39.9 per cent, which the print giant attributed to productivity gains and lower average paper prices.
As well as the loss of lucrative print and distribution contracts with Wesfarmers retailers Kmart and Coles last year, Richard Allely, CEO of PMP told Australian Printer that PMP chose let go a ‘handful’ of less significant contracts rather than drop prices to a non-viable levels needed to retain them. Alley also said he remained optimistic for the year ahead citing a number of ‘long-term contract renewals’.
Despite the recent announcement from local paper merchants of an across the board rise this month due to surging pulp and raw material prices, PMP claims it will remain largely unaffected because of its buying power and offshore paper purchases.
Allely says, “Paper is our largest single cost, however as we are the largest buyer of magazine grade paper in Australia I am confident we will not see a significant rise in our paper costs for the 2010-11 financial year.”
According to PMP, the drop in print frequency from its existing clients is due to a growing trend of reduced magazine circulation and structural decline in publishing. However Allely says the foreseeable future of print in Australia is secure. He says, “At what point does new media over take old media? Our view is that the uptake of new communication streams doesn’t mean the old ones die. We have to co-exist.”
Allely continues, “The main challenge for us for 2011 will be our ability to extract further benefits from our existing operations. We will continue to drive operational efficiencies and are well positioned to benefit from any uplift in the overall economic environment.”
PMP’s distribution division ended the year by winning a major, weekly national contract. However, this and other mid-sized new wins did not offset the impact of the major contract losses in the first half of 2010 combined with lower spend from existing customers. As such, sales revenues fell by 20 per cent, while earnings declined to a loss of $2.2M for the full year.
PMP will provide a market update at its annual general meeting in November 2010.
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