PMP has taken a hit in its 2016 half-year results with profit suffering by 56 per cent, and blames debt owed from Dick Smith for the poor outcome.
The print company logged a net profit of $1.8m, down from $4.3m in the prior corresponding period.
PMP recorded sales revenue at $390m for the six months, down 8.6 per cent from last year’s $427m, however says financial performance is ‘on track’ for an improved full-year result. It blames $24m of this downturn to a ‘print customer buying their own paper’
Profit was more than halved compared with the 2015 half-year results, and PMP is attributing troubled electronics retailer Dick Smith to the loss, and says it is owed ‘non-recoverable’ debt upwards of $2m after tax.
“The bad debt impairment is the largest bad debt in over 10 years and given the materiality and one-off nature of this impairment it has been treated as a significant item,” says PMP in its results statement.
Free cash flow for PMP took a positive turn with $17.5m up 24 per cent from the previous period’s $14m, and says its net debt has been reduced by 74 per cent to $10.4m.
[Related: PMP revenue forecast]
PMP chief executive Peter George remained confident the results were encouraging for the company despite the drop in profit, and says it exceeded expectations.
“The company has delivered another good result, slightly ahead of our expectations when full year guidance was announced,” says George.
“It was pleasing to see the core heat-set print, distribution and digital businesses in Australia record an improved EBIT by $0.2 in the previous corresponding period, and net profit after significant items would also have been an improvement of $0.2m but for the Dick Smith bad debt.”
Catalogue volumes for PMP are down 4.3 per cent, newspaper distribution is up 19 per cent and magazine volume-run through Gordon and Gotch– increased 7.4 per cent. The business says the print market ‘remains difficult’ due to pricing pressure on large contracts.
The company, which has operations in both Australia and NZ, describes trading conditions as ‘challenging with mixed signals’ in the Australian division, and says the NZ arm is ‘experiencing tougher than expected trading conditions with pricing pressure in heat-set printing’.
PMP expects to pay an interim dividend of 1.2 cents per share, unfranked, to be paid on April 6.
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