PMP feels the pull of tight NZ economy

Tough economic conditions in New Zealand and lower selling prices for printing take its toll on PMP.

No matter how optimistic the company was at last week's annual general meeting, statistics proved that the largest prnting company is struggling in this market.

Chairman, Graham Reaney, noted that though sales revenue was up 4.6 per cent to $1.347 billion, before significant items was only $85.1 million, down 6.8 per cent on the previous year.

"The softer result is attributed to reduced average selling prices in the print business, coupled with the weakening of the New Zealand economy and also some additional costs associated with the integration of the Times Printing business," he said. It is expected that New Zealand will continue to be difficult terrain for PMP, noting that: "Due to the size of its economy, New Zealand is feeling the effects of the global slow-down more severely than the larger commodity-based economies."

Brain Evans, CEO, praised the PMP team that oversaw the transference of the heatset web presses from the TImes site in Sunshine to both Clayton, Victoria and Moorebank, NSW.

"PMP’s print team, headed up by John Nichols, deserve credit for delivering such a complex relocation ahead of schedule, and for minimising disruption to customers during the transition," he said. "With PMP’s two major print sites, Moorebank in Sydney and Clayton in Melbourne, now well equipped, there will be lower investment required to support the capital intensity of the print business."

Another bright spot Evans identified was the the value of PMP’s diversified portfolio of businesses. An improved result from its Distribution and Fulfi lment division and good growth from Pacific Micromarketing helped offset the reduced contribution from PMP Print.

In forecasting the coming year however Evans concentrated on the tough competition in the heatset web sector. "This year, I attended the Drupa print industry conference [sic] in Germany. Discussions with equipment suppliers and print operators indicate that the USA and Europe are facing similar if not more difficult conditions than we face in Australia, caused by excess capacity and changing technology."

Chairman Reaney was cautious about future prospects. "Our EBIT result for the financial year will be lower than the 2008 result," he said. "How much lower will be determined by the extent of the economic slow down."

Prospect in its core activities are mixed  with cataogue volumes, the company's cash cow, expected to rise four to five percent in 2009. However, a decline in magazine circulation and increased return of unsold magazines is also affecting PMP's future performance and, with talk of PBL Media consolidating or closing its under-performing ACP titles, will be yet another blow for the company.