Wellcom has announced its expansion into the US as its profits jumped another $4.2m on the back of increased sales to new blue chip clients, including major retailers.
The pre-media and print management company announced the 17 per cent profit increase in today’s half year report, backed up by a seven per cent net revenue bump to $29.2m and statutory revenue increase of 14 per cent to $44.1m. EBITA was up 11 per cent to $6.3m.
The almost $15m revenue difference consisted of print management pass through costs.
The company says the higher sales was driven by a combination of organic growth from existing clients, full year contributions from new business wins from the prior year, and recent new business wins including David Jones, Target, and Merck, Sharp & Dohme Pharmaceuticals.
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Wellcom is in the final stages of negotiations to buy the business and selected assets and liabilities of American pre-media and print management firm theLab for $7.2m, which would be Wellcom’s first assault on the US market. The funds will come entirely from Wellcom’s cash reserves.
TheLab has annual revenues of $14.5m and is headquartered in New York, with offices in Los Angeles and Columbus, Ohio. It supplies a wide range of digital, print and creative solutions to clients including Victoria’s Secret, Dentsu McGarryBowen and David & Goliath.
Executive chairman Wayne Sidwell says the US market has the potential to provide Wellcom with significant future growth
“theLab is a strong fit with our existing business, given the similarity of our service offerings, and provides direct exposure to the large multinational brands headquartered in the United States as we seek increased global penetration for our industry leading software, Knowledgewell,” he says.
“This acquisition is in line with our previously outlined strategy to continue our geographical expansion, and is a strong base from which to establish a meaningful presence in the US market.”
Wellcom generated $4.4m in cash and has no net debts, increased its net assets from $56.7m to $57.7m, and paid a dividend of eight cents per share.
Sidwell says: “New business wins and tight controls on costs, notwithstanding increased investment in new business activities and continued investment in software development that will underpin the Group’s future growth.”
Wellcom’s profits increased seven per cent last year after it bought out the remaining 50 per cent stake in iPrint from Australia Post.
Melbourne-headquartered Wellcom was founded by Sidwell in 2000 and now has overseas operations in London, Singapore and Kuala Lumpur, Malaysia.
[Related: Blue chip brands]
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