OVATO SALES DOWN BY 28% IN HALF YEAR, PRINT AND DISTRIBUTION HIT

After a tumultuous six months print giant Ovato saw its sales revenue diminish by $92.8m or 28.2 per cent in the half year to December, but the company stemmed its losses - which ran to $58m last time - to end the period $9.7m in the red after significant items.

 

Its EBITDA before significant items was 2.7 per cent lower than the prior corresponding period (pcp) at $22.3m – although this included $18.3m in JobKeeper income and $1.6m in New Zealand Wage Subsidy - on sales that were $236.2m, down from $328.9m in the pcp.

As a result of its restructure at the end of the period net debt was $34.7m down from $90.9m in the pcp. The restructure saw it exit manufacturing in Victoria, shed a quarter of its 1200 workforce, and receive a capital injection, mainly from the Hannans and major client Are Media, for $40m.

While the operating performance of Retail Distribution and Book Printing improved, and Marketing Services was steady during this period, the Print and Residential Distribution businesses were severally impacted by the pandemic, resulting in the need to undertake the restructure and recapitalisation of the Ovato Group during the course of the first half of FY21.

Ovato Australia revenue fell by 29.6 per cent or $80.4m to $191.2m, with Ovato New Zealand net sales revenue down by 21.5 per cent to $44.9m.

EBITDA in Australia fell by 10.5 per cent to $19.9m, while in New Zealand it fell by 11.7 per cent to $2.4m.

In its outlook, the company says the restructure has “reset our balance sheet and allowed us to reduce our manufacturing footprint and fixed cost base to better match future demand”.

However, it says while books, packaging, retail distribution and marketing services are seeing increased opportunities, heatset catalogue printing and residential distribution volumes “are not returning as quickly as expected” due to the lingering impacts of Covid-19.

The company says its new Ovato Print Australia Enterprise Agreement “allows us to be more flexible in managing our workforce and to affordably adapt to future changing demand”.

Ovato says it is also evolving other parts of the business “to take advantage of growth areas that sit well within our existing infrastructure and which do not require material capital investment".