Stronger operational efficiency and a $20m tax benefit from entering a tax consolidation regime increased net profit after tax before significant items to $56m. On a like with like basis net profit after tax increased from $11m to $36m. Operating sales revenue was $1.21bn, 3.5 per cent down due to a combination of lower paper prices and exit of the UK publishing business in 2002/03. Net capital expenditure was $44m, in line with PMP’s $45m target for fiscal 2004. Over the period, net assets increased by $19m to $158m.
David Kirk, PMP CEO, says the company has delivered its projected EBIT improvement of $30m and restored operating efficiency to the core heat-set printing business.
“This year we have significantly improved the sustainable earnings capability of our core operating businesses. We now have a much stronger platform from which to drive continued earnings increases and growth. The one-off costs have been large but with short paybacks; we are confident they will contribute to continued improved performance in the years to come,” says Kirk.
PMP’s core heat-set web printing business achieved a major improvement in earnings due to increased print volumes and productivity, and decreased costs and waste. PMP’s direct marketing service, PMP Direct, delivered solid and sustainable EBIT growth due to a strong Australian market environment and improvements in sales, marketing and delivery.
As forecast, Pacific Micromarketing delivered its first positive EBIT result of $0.4 million and is expected to play an important part in developing PMP’s direct marketing services capability.
Its magazine distribution arm Gordon and Gotch had a disappointing result with an EBIT loss of $200,000 due to poor implementation of a new magazine returns processing system. However, the company made positive progress in outsourcing its warehouse and logistic services and in implementing a new IT system.
During the year, PMP Digital underwent further restructuring, including the reduction of a further 90 staff. The business continues to struggle in a rapidly changing market. Although the business incurred significant one-off costs (mostly redundancies) it recorded a positive operating earnings contribution.
Kirk says that a modest improvement in the print advertising market coupled with a continued focus on cost and productivity should see PMP deliver a solid performance in the first half of the 05 financial year, aiming for a first half EBIT in the range of $47m to $52m.
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