PMP has managed a small profit from continued cost cutting, despite cataclysmic declines in directory volumes and a soft retail market dragging down sales.
Today’s annual report shows a net profit of $3.4m compared to the $70.2m loss of FY2013 as the company slashed its operating expenses 16.5 per cent to $900.3m, including cutting staff expenses by 18 per cent.
Sales revenue dipped below $900m, falling 7.8 per cent to $899.2m and propped up by $9.2m of other revenue. EBIT before significant items fell 14.7 per cent to $28.8m.
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Australia’s biggest printer did pay down a healthy chunk of debt, however, now sitting at a record low $51.7m, down 42 per cent.
By far the biggest problem for PMP was an apocalyptic 72 per cent drop in directories volumes, with sales revenue falling $50m, as they increasingly go online and major client Sensis emphasises its digital growth with the future of the Yellow and White Pages in print remaining uncertain.
Volume for the company’s key catalogue business fell three per cent thanks to softer retail markets and heatset sell prices were also lower. The lone bright spot was the growing distribution business that saw a 10 per cent volume increase.
PMP chief executive Peter George says demand in the major retail sector remains sound, although there has been some softening in the mid and smaller retailer categories.
“Heatset printing continues to be challenged by structural factors such as excess industry capacity in Australia, in conjunction with a softer retail market, where pricing continues to remain competitive,” he says.
In Australia, PMP’s converted tons of printing fell 10.8 per cent, letterbox distribution was up 10 per cent and magazine distribution was down 5.3 per cent.
The company spent $9.1m on significant items like redundancies and equipment relocation costs as it moved to dramatically cut costs to get back in the black, but these were far lower than FY13’s $88.5m when PMP’s ‘transformation strategy’ began.
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George remains upbeat about PMP’s future, saying the revenue, EBIT and volume falls are in line with expectations and the first two phases of the ‘transformation strategy’ are complete.
“We have substantially reduced the cost base of the business and also considerably reduced financial risk. We continue to focus on the third priority, which is to build a more profitable and sustainable PMP,” he says.
“As part of this we have enhanced our ability to offer nationwide bundled printing and distribution solutions to our major customers and this is proving to be an increasingly attractive option for a number of our largest accounts.
“We are also improving our relevance to retailers. There is an increased recognition by major retailers of the value of catalogues as an effective selling tool and we are developing our capability to assist retailers in targeting versions of their catalogues to specific geographic and demographic target audiences.”
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