Blue Star chief flags slight improvement in print market

Coming off a horrendous year with a massive profit drop, Chris Mitchell is cautiously optimistic about the state of the print market across the Tasman.

“While the volumes are still down there are some signs that things are improving,” said the group managing director. “It’s very difficult and I don’t see much change any time soon.”

End of year figures released in New Zealand for the group’s holding company, Blue Star Group Holdings, pretty much reflect the results published in August for the operational unit. The final figures show revenues of NZ$602 million, up 1.3 percent, while profit (EBITDAR) is down 23.6 percent to NZ$40.2 million.
Mitchell blames the drop in profits on very difficult trading conditions in Australia and New Zealand “as a result of the most challenging downturn ever experienced in the print industry.” Reduced customer volumes and intense price competition were toughest in the group’s sheetfed businesses, most notably in Sydney, Canberra and Auckland.

Webstar Australian and Blue Star DM were the best performing divisions. The company claimed to have reduced its costs by 8 percent. A major component of this was the integration of the McMillan Group into the Sydney facilities as well as the restructuring in Canberra and Auckland. A large number of jobs went in the restructuring.

The financials of the company are a tangled web with the parent company ‘forgiving’ over $100 million in debt as well as topping up the funds with an extra $10 million in cash. Payment of interest on over $100 million bonds is suspended as part of the refinancing. This has caused some heartache among retail investors in New Zealand. There is no indication when the company will resume the payments, at the now higher rate of 13.1 per cent.

In what seems to defy logic the goodwill component on the balance sheet stands at a considerable NZ$219.313 million while customer contracts are at NZ$12.8m and the value of the brands of the businesses Blue Star has bought along the way is only $1.6million. At the time of going to press a request for clarification on the way good will is accounted for was unable to be answered due to the individual concerned being away injured.

Overall the company maintains its financial position has ‘been significantly strengthened’ as a result of the restructuring.