Penfold Buscombe takes a hit as profits plummet

The operations of Penfold Buscombe in Queensland have continued to perform below expectations, but the pain is not over yet. Following the recent purchases of Scanlon Printing and Octane, further reviews are underway that could result in additional restructuring costs.

Demand for print also fell in New South Wales and Victoria during March with a further deterioration reported in April. Alistair Hill, managing director of Penfold Buscombe, claims reduced activity across major customers has impacted sales and margins for the company.

“This period of poor trading has been longer than previously experienced,” says Hill. “While PMP has met its minimum sales requirement for the first year, these market conditions being experienced by Promentum have also reduced the opportunities for growth in sales from this relationship.”

While the company expects an improvement in trading during May and June, it will not return to previously expected levels. The company is gearing up for a major review of its cost structure to ensure it is in line with current market conditions. Net profit before tax for the 2205/06 financial year is expected to be in the range of $9 million.

“Whilst the downturn in the second half is disappointing, management are confident they can achieve an improved result in 2006/07,” says Hill. “The company remains in a strong financial position with sound cash flows. The Board has instigated a strategic review of the company’s operations and growth alternatives with the objective of achieving satisfactory returns for shareholders.”

Penfold Buscombe claims the impact of restructuring in Queensland will be quantified in June when the review is completed, and insists the Scanlon and Octane acquisitions combined with management restructuring will bring a significant improvement in performance for the 2006/07 financial year.