PMP downsizes New Zealand print sites

Second stage of PMP transformation sees its five print sites in Auckland reduced to only two.

Expected to be complete in the next 18 months, the overhaul will also see the number of current presses cut back from eight to five, including a new press from overseas and a reconditioned press acquired from APN. For many New Zealand printers, the news is likely to come as a massive blow after APN last month announced that it will close its Manukau plant.

According to CEO, Richard Allely (pictured), the new structure will enable PMP to better meet the needs of its New Zealand customers, as well as delivering financial benefits to the business.

“The annualised benefits from the NZ and Australian restructure will amount to $28 million with approximately 80 per cent of this to be realised in fiscal 2012, with the full benefits in fiscal 2013. Some benefits will flow through in 2011 as the programs commence,” he said.

 
Allely added that the redundancies and the write off of redundant plant and equipment plus plant relocation will cost $29 million, which will be recorded as a significant item, in the fiscal 2011accounts.

“The strategy for our print business is clear, we want to be the lowest cost and most customer responsive business in the market and at the same time, achieve a return on funds employed that outperforms the industry,” Allely said.

In Australia, PMP is adding a new press to its Perth print site, while the company’s Scribo acquisition is proving difficult with management currently undertaking a strategic review of the business. According to chairman, Graham Reaney, the lack of new products by local and overseas publishers and the appreciation of the Australian dollar has resulted in Scribo losing market share.

PMP’s first-half earnings for 2011 are expected to exceed the previous year’s result and be within the range of $31 million to $33 million. “The second-half result is well supported by a number of new contracts and we would expect a considerable uplift from last year’s $22.1 million result,” said Reaney. “For the full year, we are looking for double-digit growth in EBIT before significant items.”