The newly merged $1.2bn PMP says lower than expected print sales will impact on its full year profits, with the EBITDA for FY2017 likely to be up to 20 per cent less than originally forecast.
Speaking to investors CEO Peter George says the company has revised its full year 2017 profit forecast down from its previous $36m-$41m to a likely EBITDA of $31m-$34m.
He says the profit downgrade is due to market conditions that remain tough, with retailers controlling costs, while publishers are seeing print runs and paginations under pressure. Delays in union consultations and retail sector weakness have also contributed to the downgrade. The company saw a lower than expected customer churn as clients were awaiting the approaching consolidation with IPMG.
However George told investors that profits will trend upwards in the next two years, he is expecting an EBITDA of $70-$75m in 2018 and $90m-$100m in 2019. He also says PMP will be net debt free by 2019. Its expects to restart capital management in 2018 with $60m of franking credits.
The CEO of the business says that the merger with IPMG has resulted in a 25 per cent reduction in press capacity thanks to retiring older machines, which he believes will lead to a more equal supply demand relationship, which in turn will lead to more stable and sustainable prices. George is not expecting the business to make any serious capex in the next few years.
George says the company is winning new business, and is expecting to re-sign key customers to a value of $130m by the end of June. It will continue to work with independent print brokers and print managers as a partner rather than a competitor.
PMP is expecting $1.2bn revenues this year, split between Australian print at $460m, Gordon & Gotch Australia at $430m, Australian distribution at $80m, Australian digital business at $40m and New Zealand at $180m.
George says PMP has 55-60 per cent market share in Australia for heatset web. Its distribution business has a 35 per cent market share, while Gordon & Gotch is the country’s number one magazine distributor
George says the merger went through with a high level of efficiency, and that the period of risk of disruption is now behind it. Equipment relocations are currently in full swing, and expected to be finished by end of July, with the company ready for the traditional upswing in work come August.
Costs for the biggest merger in Australian print history including the closure of three sites reached $75m, $5m less than the $80m originally forecast.
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