Today, PMP announced the second stage of its transformation plan, following the successful completion of stage one in Australia, which the company claims delivered $27m in annual cost reductions.
The company says in Australia, stage two will build on the process of “continues improvement” implemented in stage one, which has identified new opportunities for the Group’s print division. This will involve the installation of a modern press in Perth.
Richard Allely CEO of PMP told Australian Printer the company had not decided on the hardware be installed at the Perth facility however he confirmed the press would give PMP a larger slice of the local market.
He says, “The press will bring the Perth site up to speed with our other facilities. Currently there is a lot of work in the Perth area we can’t take because we don’t have the capability. This installation will give us the opportunity to grow our print volume in the region.”
Allely said the company’s overall improvement could be put down to its lower cost base, increased efficiency and the securing of several long-term clients. He says, “We have picked up a number of major clients recently, such as Target Distribution and Pacific Magazines, you don’t get clients like that unless they are confident you can deliver what they want.”
While it’s good news for the print division, Chairman Graham Reaney says the company’s book distribution business Scribo, has not performed in accordance with the forecasts at the time of acquisition in 2008.
Reaney said a number of factors had adversely affected this business including the impact of the global financial crisis on sales and the lack of new products by local and overseas publishers, as well as the appreciation of the Australian dollar.
He says, “This has resulted in Scribo losing market share to offshore internet retailers offering GST free sales to consumers. It has also enabled the entry of foreign wholesalers selling and delivering from offshore direct to booksellers.”
Management is currently reviewing five strategies for the business, none of which include offloading the business.
Meanwhile across the Tasman in New Zealand, PMP has announced plans to restructure its operations in order to rationalise operations, reduce its cost base, improve efficiency and enhance its customer service.
The plan is based on the certainty associated with a new 10 year print contract with APN and the re-signing of the Fairfax media print contract to 2015, which largely replace the volumes lost with the ACP contract.
As part of the transformation, PMP plans to consolidate its current five sites in Auckland into two sites this will be completed in the next 18 months. As a result, the current eight presses in New Zealand will be reduced to five, including a new press from overseas and a reconditioned press acquired from APN.
Allely said the redundancies and the write off of redundant plant and equipment plus plant relocation will cost $29m, which will be recorded as a significant item, in the fiscal 2011 accounts.
He says, “The annualised benefits from the NZ and Australian restructure will amount to $28m with approximately 80 per cent of this to be realised in fiscal 2012, with the full benefits in fiscal 2013. Some benefits will flow through in 2011 as the programmes commence.”
Commenting on the overall outlook for the full year Allely says, “It’s a tough, competitive environment but our outlook is positive, we have our cost base under control, we understand the market better, we are maximising our returns and we leave to our competitors the work, which doesn’t suit us.”
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