PMP on track for $90m-$100m pa EBITDA

A new debt free PMP is well placed to thrive in the coming years, according to CEO Peter George, commenting as the company’s annual results, the first to include the merged business, come out.

George says that while the results contain some ‘ugly numbers’ and reflect PMP’s stalled first half, the underlying trend is positive for the country’s biggest print business, which he says is on track to deliver $90m-$100m EBITDA from 2019 onwards.

George says the newly enlarged PMP has a 55-60 per cent market share in the heatset web business with $430m of sales. He says integration with IPMG  is now complete and meets the market requirement, commenting, “The company now has a press fleet aligned with demand.” He also says the consolidation which happened in the industry, taking web players from five to two, is beneficial for the whole print industry, as capacity has been rationalised.

The 2017 full year results show PMP revenue rose by 28.9 per cent to $1.05bn, however this masks the fact that PMP’s print revenues shrank, with the integrated IPMG sales more than making up for them. PMP’s EBITDA before significant items was down 37 per cent to $32.2m, with net loss of $1.9m, from a net profit of $11.8m the previous years, and blowing out to $126.4m after significant items associated with the merger, including $61m of redundancy payments, are included.

George says, “Fiscal 2017 was both challenging and rewarding, marked by print industry consolidation and the completion of the merger with IPMG. I am pleased to report that our transformation programme has run smoothly and on target. We end the year with a press fleet rationalisation complete, a newly optimised manufacturing footprint, and $40m of annualised cost savings actioned within four months of the merger.”

George says the company spent $75m of the $80m it had budgeted for costs savings, which will amount to $55m a year ongoing, and which have already seen a $46m saving this year, thanks to reduced capacity, operating costs, back office savings, procurement savings in volume

Commenting on the figures, and the disappointing second half, George says, “The drawn out approval from the ACCC which should have taken one month but in fact took seven is responsible for a drop in PMP print sales. We had to batten down the hatches, the ACCC created a much longer than necessary period of uncertainty for our clients and the market.”

Following the merger announcement IPMG lost the Coles contract to IVE, and PMP saw the Pacific Magazines contract go the same way, but George says this was expected following the merger as those clients did not want to use the same printer as their main rivals – Woolworths and Bauer – while George says PMP has won a significant number of new contracts, and retained some $130m of sales with existing customers.

Print Australia sales rose by $63m to $263m while EBITDA dropped by 36.8 per cent to $16.7m. Print NZ sales rose by 42.7 per cent to $193.5m with EBITDA down by 17.2 per cent to $12.4m Distribution and marketing services was up by 23.8 per cent to $595m, although underlying revenue was only up by $1.4m to $180.9m, with PMP taking a hit with the Dick Smith collapse, and Griffin Press printing 18 per cent less tonnes on contract losses. Gordon & Gotch sales rose strongly, as the Bauer contract kicked in, with statutory revenue up by 36.1 per cent in Australia or $124.7m and underlying revenue up by 26 per cent to $56.4m.

George says, “PMP is the biggest supplier to tier 1 businesses in the market, and we are working to secure the business from tier 2 and tier 3 companies.” He is realistic about growth prospects, not expecting either the number of magazines or catalogues required in the Australian market to grow. However he says, “Aldi said it would not use catalogues when it first arrived here, now it is one of the biggest catalogue clients in the country.”

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