Blue Star reports lift in earnings despite a dip in revenue
Chris Mitchell sees clear opportunities for the trans-Tasman web and sheetfed-printing group with a 3.3% increase in earnings in the six months to December 2010.
Announcing the company’s result at a time when there are reports its PE owners, CHAMP, expect rival printer GEON to fail, managing director Mitchell says the improved financial and operating performance is a result of repositioning the business. He termed the lift in earnings and cash flow “encouraging”, especially in a sector undergoing “significant change to meet evolving customer demand.”
Revenue for the period was $293.3 million, marginally below the previous comparable period. Sheetfed operations were reported as remaining profitable in both markets despite reduced volumes, over capacity in the sector and the resultant “margin compression.”
Mitchell (pictured) says there are positive signs of momentum and opportunities, drawing attention to the new ACP Media NZ printing contract, which will feed into next year’s results.
“We continue to invest in the business where there are compelling investment opportunities, such as the new print facility in Auckland to accommodate the ACP contract, which will be commissioned in the next couple of months,” he said in a media release.
“We have retained our strong market position. We have a modern asset base, loyal customers, positive cash flow conversion and the commitment of staff alongside the ongoing support of Blue Star’s shareholders and lenders.”
In a move that almost mirrors the financial arrangements of fellow PE-backed printer, GEON, the company is refinancing with a further cash commitment from shareholders. If it meets a number of unspecified requirements, the current senior facilities will extend from 2012 to 2015.
The comparison is brought into sharp relief with a report in the financial press from an unnamed source that claimed CHAMP expects GEON to fall over. There is no attribution to the report and at time of going to press CHAMP has not returned our calls.
Mitchell (pictured) says there are positive signs of momentum and opportunities, drawing attention to the new ACP Media NZ printing contract, which will feed into next year’s results.