Spicers has delivered strong results for the half year, with the Australian sector of the business generating earnings of $3.07m, up 69.9 per cent form $1.08m in the pcp, which the company attributes to a combination of cost savings and improved trading performance in the region.
Net sales revenue for the group was $193.19m, down 1 per cent from $195.21m in the pcp while its underlying earnings before interest and tax (EBIT) were $4.5m, up 38.9 per cent or $1.3m from $3.26m in the pcp.
Revenue from Print and Packaging was down 2.7 per cent, to $152.9m from $157.11m in the pcp, while Sign and Display revenue grew by 5.8 per cent, to $40.29m from $38m. Spicers says it saw strong revenue growth for Sign and Display particularly in Australia. Its total net sales revenue performance was marginally behind on the pcp, being 1 per cent down, which the company says reflects progress in comparison to previous periods, with management focus on customer segmentation and price management strategies within product portfolio categories driving this improved performance.
The Australian region also produced sales revenue of $103.69m, increasing by 0.8 per cent from $102.82m in the pcp. Underlying EBIT in Asia saw a 5.6 per cent increase on the pcp driven by increased sales revenue, while New Zealand’s result was 5.1 per cent down on the pcp, in what the company says were subdued market conditions.
[Related: Paper price increases for 2018]
On the company’s drop in print and paper revenue, David Martin, CEO of Spicers, says, “It reflects the industry, we cannot help the trend. We have managed costs accordingly but that is how the industry has been going for the last ten years.
“We have a strong handle on what we have to offer to the market, we have adjusted our products and what we offer to our customers. We are confident in what we are doing as a business and are happy with the results. It has been a great team effort.”
Spicers had a statutory profit after tax of $1.9m for the half year. Profit after tax from continuing operations of $2.7m was up 89.1 per cent on the pcp with a loss after tax on discontinued operations of $0.8m was recorded in H1FY18. According to the company, restructuring in the organisation delivered cost savings of $1m in 1H18.
Martin says, “I am pleased to be able to report a significant increase in group underlying earnings for the first-half of the 2018 financial year, a result of our people across the group successfully executing against our strategies over the past year.
[Related: Spicers gets $30m financing]
“As promised, we are realising cost savings in our Australian organisation by improving operational efficiency and streamlining administrative activities. Further, our structured approach to portfolio management and market engagement is driving improvements in trading and profit returns across all our product revenue streams.
“Our Asian operations have grown their revenues and earnings, particularly in print and packaging categories in Malaysia. Our New Zealand business continues to deliver healthy returns in flat market conditions, with the recent Sign Technology acquisitions contributing revenues and profits as expected.
“We continue to closely manage working capital and cash across all our businesses. Inventory levels have reduced in comparison to both June 2017 and prior year balances, driven by our focus on supply chain efficiency and return on inventory investment in every product portfolio.
“Over the past year we have made strong progress developing an efficient and learning organisation, while delivering on our promises to customers and shareholders. Going forward we will continue to focus on optimising operating returns and cash flows in print and packaging categories, while generating profitable revenue growth in sign and display and other new growth categories.”
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