Blue Star cops a beating with drop in earnings

Blue Star battles through “the most challenging downturn ever experienced in the print industry.”

In its full-year 2009 preliminary results, the trans-Tasman private equity-backed company recorded sales revenues of NZ$578 million, up 18 per cent from the previous financial year; while earnings before interest, tax, depreciation, amortisation, restructure costs and one-off items (EBITDAR) was NZ$35.2 million, down 32 per cent from the previous year.

In his Managing Director’s Report, Chris Mitchell [pictured] claimed that: “ … the decline in profits was due to very difficult trading conditions in Australia and New Zealand” which he believes are the worst ever to affect the printing industry.

Management has reduced Blue Star Print Group’s overall cost base by 5 per cent (including the closure of McMillan Print earlier this year), though the full benefit of these reductions have not yet flowed fully through.

Mitchell believes that Blue Star’s financial position has been strengthened and augmented after its parents, Sirius NZ Holdco Limited reached an agreement with its senior lenders to reset the company’s banking covenants through an additional NZ$10 million of shareholder funds.

“This measure is somewhat similar to decisions by many publicly listed companies, in the current difficult economic environment, to forego or reduce dividend payments,” said Mitchell.

As part of the banking arrangements, Blue Star Print Group is required to suspend interest payments on its publicly traded bonds until interest can be paid in compliance with the group’s banking covenants.