Industry hopes dashed in Trend Survey Report
While printers suffered a difficult trading quarter, the industry is more confident about future business prospects than it was 12 months ago according to the latest Printing Industry Trends Survey.
Hagop Tchamkertenian, manager of industry and commercial policy at Printing Industry, says the survey shows that industry optimism relating to improved trading conditions has failed to eventuate, with key indicators like orders, production, sales and net profits all falling during the quarter.
“Taking into account the influence of seasonal factors, it's not surprising to see that March 2006 quarter outcomes were below expectations across a number of key indicators,” says Tchamkertenian.
“The industry was extremely optimistic at the end of last year as reflected by the December quarter projections, and as a consequence forgot to factor in the influence of seasonal factors,” he says.
The survey also confirms the entrenchment of some concerning trends. Skilled labour availability continues to remain an issue, with industry expectations pointing to the continuation of the problem. Selling prices are forecast to deteriorate once again despite falls in 21 consecutive quarters.
The rise in the number of outstanding debtors once again highlights the importance of managing cash flow, and capital expenditure intentions continue to remain at robust levels despite a difficult trading quarter.
Other important developments during the March 2006 quarter include:
Capacity utilisation remains a problem
On the critical issue of capacity utilisation rates, results show that only 56.8 per cent of respondents were operating at capacity levels of 70.0 per cent or over, down from the 66.9 per cent reported last quarter and the 60.3 per cent level reported this time last year.
The highest capacity utilisation rates were reported by respondents in Western Australia, South Australia and Tasmania, while idle capacity was a serious issue for respondents in New South Wales.
High capacity utilisation/activity rates were reported during the quarter in the following product sectors: Greeting Cards, Calendars and Diaries, Other Packaging and Paper Converting and Paper Merchants.
Excess capacity exists in the Business Forms and Continuous Stationery, Graphic Reproduction, Screen Printing, Desktop Publishing, Book Binding and Quick Printing sectors.
A total of 89.0 per cent of survey respondents listed lack of orders as the primary barrier to increasing production levels, an outcome higher than the 81.8 per cent proportion reported during the December 2005 quarter, and the 80.2 per cent proportion reported this time last year.
What's in store for the printing industry
Industry respondents remain optimistic that the June 2006 quarter will be characterised by strong trading conditions, and it is expected to yield the following results:
The outlook for general business expectations over the next six months remains favourable in New South Wales, Victoria and Queensland, and respondents are forecasting:
With the exceptions of Paper Merchants and Labels, which forecast deterioration, most product sectors are expecting improvements in business conditions over the next six months.
Capital expenditure intentions remain positive with most sectors either forecasting increased investment in plant and machinery or no change during the next six months.
Any one interested in obtaining a copy of the full survey report can contact Printing Industries. Hard copies of the report cost $20 for members and $40 for non-members. Electronic copies of the report are also available.