The country’s biggest print business PMP says it will be producing $90m-$100m EBITDA by 2019 and going onwards, with its supply capability now aligned with market demand.
The company’s annual report for the 2017 financial year which includes the IPMG figures from March onwards shows EBITDA before significant items down by 37 per cent, on sales up by 28.9 per cent to $1.05bn, while net loss was $1.9m down from an $11.8m profit last year, with net loss after significant items $126.4m, most of these costs associated with the IPMG merger, including $61m of redundancy payments.
Peter George, CEO, PMP says that while the results reflect PMP’s stalled second half, the underlying trend is positive for the country’s biggest print business.
He 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.”
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.
[Related: PMP downgrades profit forecast]
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, and 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. The ACCC created a much longer than necessary period of uncertainty for our clients and the market.” 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.
Following the merger announcement the IPMG Coles contract and PMP’s Pacific Magazines contract both went to rival IVE, 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 one businesses in the market, and we are working to secure the business from tier two and tier three companies.” He is realistic about growth prospects, not expecting either the number of magazines or catalogues required in the Australian market to grow.
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