In its half-yearly results on 16 February, Salmat reported net profit at $13.5 million, a year-on-year fall of 41%, and net debt at $254 million, with earnings down 13% and revenue down 5.7%.
Revenues slid 2.6% at its Business Process Outsourcing division, with mail pack volumes down 1.3% but mail pack impressions rose 2.7%.
There was a solid performance from its Targeted Media Solutions arm, where revenue jumped 17%, thanks partly to a 2.7% rise in catalogue volumes as well as continued growth from its new digital businesses.
The worst news came from its Customer Contact Solutions division, pulled down by the loss of its major Telstra call-centre contract last March.
Chief executive Grant Harrod told ProPrint that Salmat was happy with its results, which he said were in line with expectations. The fall in profits was “predominantly cyclical”, he added.
Harrod attributed the rise in mail pack impressions to customers increasing cross-promotions within bills and statements, while the fall in mail pack volumes was minimised by winning new business and a reduced shift to electronic.
He said catalogues had solid demand from large national retailers, but the weaker trading conditions had reduced demand by smaller retailers in areas such as fashion, jewellery, books and lifestyle.
Harrod predicted mail pack volumes and impressions would “remain relatively stable”.
But he predicted a “very strong” future for catalogues, in keeping with a rise in volumes “in spite of weak retail trading”.
“Catalogues remain the most effective acquisition channel to drive retailer sales and present promotional offers to consumers,” he told ProPrint.
“We are also seeing growing support of catalogues by SME business and non-traditional retailers including fast-moving consumer goods, banking and telecommunication providers.”
Salmat expects to book about $1.5 million of restructuring costs in the second half.
The restructuring included “significant job cuts”, mostly from call centres, and was aimed at “improving operational efficiency and eliminating duplication”, according to Harrod.
“This has involved restructuring and moving staff into new roles and in some situations, where suitable roles can’t be found, their current role has been made redundant.”
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