Spicers has described the past year in Australia as disappointing and challenging in its annual general meeting (AGM), the paper merchant bluntly evaluating a difficult 2016 and revealing its plans for the future.

Spicers posted its first profit in eight years at $5.3m, with the upturn coming from Asia, New Zealand and its sign and display arms. The paper giant says the 2016 financial year was particularly underwhelming for its Australian operations.

“The Australian business experienced a challenging year. Underlying EBIT of $5.4m was disappointingly down 40 per cent on prior year,” says Spicers chairman Robert Kaye.

“Total sales revenue and gross profit were adversely impacted by competitive pressures in the commercial print market and foreign exchange volatility, which impacted pricing and cost of sales

“While challenges remain, there are also many strategic opportunities. The path ahead to put Spicers on a stronger and more sustainable footing for the future is clear,” adds Kaye.

Spicers chief executive David Martin also told investors a global downward trend in paper usage has sparked a year-on-year decline in sales revenue.

“Total ANZA operations net sales revenue has declined at an average of 4 per cent a year, from $472m in 2012 to just over $392m in the last financial year. Just over half of this revenue comes from our largest business here in Australia,” says Martin.

“Further analysis of this total ANZA revenue decline shows that our core revenue streams, paper product related sales, fell at an annual average of 8 per cent. This has primarily been driven by the structural decline in paper use as the world becomes more digitised.”

[Related: Spicers to solve financial bottleneck]

Martin adds that a strong year for its sign and display division managed to partially offset the decline, however says it is yet to compensate for the dip in paper sales.

In a bid to turnaround its Australian operations, Spicers also described to investors its ‘plan to win’ strategy, kick-started by its simplified capital restructure.  

“Here in our Australian business a number of positive steps have been taken since I commenced with Spicers. The business structure has been flattened to enable customer engagement to be increased, I am myself very focused on meeting and interacting with our customers,” says Martin.

“Developing our people will be critical to the successful execution of our strategy. There are two examples of activities of this nature already underway, adaptive sales techniques and skills training for our sales force, and commencing our Lean journey in our Victorian location, to be spread across the business through 2017.

“Achieving our diversity objective of increasing the proportion of females in management roles by 25 per cent by 2019 is an important element of developing our business and our people, and we will achieve this goal,” he adds.

The group also says its 2017 trading performance has seen strong demand in both Asia and New Zealand, with a difficult start for its Australian arm. It asserts two new agencies signed this month are set to counter challenging paper conditions across all locations.  

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