The Slaven years: Print21 analysis
When Kevin Slaven stepped into the CEO’s chair at what was the newly merged PMP – the country’s biggest printer – three and a half years ago the world was a different place.
Pre-Covid, obviously, and with magazines and catalogues booming along, the newly merged billion dollar company was setting its sights on growth, based around investment in the latest printing technology.
Long-time PMP CEO Peter George had suddenly resigned due to family circumstances, and Slaven, CEO at IPMG for the previous four years, was initially interim CEO, and then made permanent a couple of months later. Little could he have realised that he would go on to spend much of his time battling declines left, right and centre, as myriad forces battered the volumes of those magazines and catalogues, sending investors scurrying away from the company. His calm demeanor would prove more than useful.
The merger, which had taken longer than expected thanks to the ACCC, was well underway. As George resigned though it hit a few problems. Synergy savings fell below expectations, labour costs were higher than expected, and contract renewals more expensive.
PMP’s share price plummeted 31 per cent on the day George left and the shortfalls were revealed, falling from 77c to 51c. That share price has since lost 99 per cent of its value of that day, and is now worth less than one hundredth of what it was, at 0.004c.
Ovato, as it became two years ago, has faced the same intense market dynamics as its multi-site heatset peers overseas, but has actually fared better; the two biggest US heatset printers had to merge to stay alive, and the UK’s biggest heatset operation, Polestar, collapsed in an ungainly heap.
Its results make stark reading though - Ovato has transitioned from $1bn in sales revenue in 2017 to likely just half of that this year. 2017 also saw the era of the big losses begin, with a $126m net loss, $105m of that accounted as coming from the merger with IPMG.
Sales in 2018/19 were $745m, a year later $669m, and last year $539m. 2018/19 saw a net loss of $43.8m, then $84.3m the following year, with last year’s net loss $111m. No-one is betting this year’s figures will be any better, as the company flags ongoing struggles to get its core heatset catalogue work back up to pre-Covid levels.
As a director and CEO, Slaven has had to face and execute some difficult decisions, most notably of course the closure of its Melbourne manufacturing site, with the loss of some 300 jobs, and he faced plenty of criticism for the use of the government’s FEGS to pay out $17m to sacked workers.
Remaining affable throughout his tenure, when he has spent most of it under intense pressure as the Ovato business struggled on many fronts, Slaven presented a logical case for the decisions undertaken. He believed that what was good for Ovato was good for the industry, and to critics from within the industry, he also pointed out that Ovato was a significant spender on trade services. The opening of the Warwick Farm supersite 18 months ago was a bright spot, but there have been plenty of idle times on the presses there ever since.
With the country’s biggest magazine publisher Are Media as a major shareholder, owning 16 per cent of the business, Ovato’s magazine printing seems secure, for as long as magazines are around that is, and the indications are that the era of mass closures is over. Harpers Bazaar for instance is about to start-up again in Australia. Are Media is now a fully vertically integrated business, owning a chunk of Ovato, most of Webstar in New Zealand, and now the former Gordon & Gotch retail distribution business.
Catalogues are a big issue for Ovato. Coles famously stopped having them printed nine months ago, and while Ovato’s arch rival IVE was the unfortunate printer in that case, the supermarket's decision focused the minds of other big retailers; Kmart has since stopped, and Woolies is experimenting. All the research says catalogues work, but youthful staffers in marketing departments can't get the data analytics from print on their phones that digital delivers.
Slaven’s departure came as part of a plan, which will see a slimmer Ovato. Its second biggest shareholder Are Media has bought the old Gordon & Gotch retail distribution business, a Hannan family entity has bought the marketing services operations. Melbourne has gone of course, and there would be few betting against Brisbane going the same way, with the Hannan-owned site currently being sold. And while the Ovato lease there lasts for another three years, a relocation of work down to the Warwick Farm supersite in the near future has to be a distinct possibility.
The company is not seeking an outside replacement as CEO, with Hannan family scion, James Hannan, now stepping into the hotseat. He takes over a business operating in a different world. The Hannans of course have seen the value of their investment shrink rapidly since the merger, but their smart investments in property will have eased the pain.
They say there is never a dull moment in print, and as Slaven reflects back on his time at the top with Ovato, he would certainly concur with that. He must have wondered what new issue he was going to face coming into work each day. In a world of rapid change driven by IT, the communication sector is facing more change than most. Steering a gigantic ship through turbulent waters not going in the direction they always have takes some doing.