PMP reels from catalogue fallout

Volumes and prices are predicted to fall in its core printing business, particularly in the second quarter of the 2005/06 financial year. The primary reason for this is the state of the retail catalogue business, with demand from retailers dropping off, the company claimed at its annual general meeting.

"The group is forecasting a lower first half result than last year largely due to lower print volumes in the second quarter," claimed Graham Reaney, chairman for PMP, during his address to shareholders.

Richard Allely, company CFO, insists problems with volumes and prices will be felt by operators right across the industry, rather than being specific to PMP. "It is a reasonable assumption that the lower than expected volumes and prices leading into the very busy second quarter of this financial year are mostly an industry-wide issue," he said.

In spite of this fall in demand, PMP insists it will still be able to secure an earnings-before-income-tax for the full financial year between $80-85 million, with earnings evenly split between the first and second half. This is attributed to operating efficiencies resulting from the installation of its new equipment, as well as from other restructuring,Ó according to Allely.

"The new presses [MAN Roland Lithoman 64] provide a quicker time to market, higher quality, improved format flexibility and importantly, a lower cost to manufacture. The benefits from further restructuring will be significant in the second half, particularly in areas such as support costs and business overheads. Further benefits will be achieved with improved efficiency in end-to-end business processes in manufacturing and optimisation of sales and operations planning activity."

While the 2004/05 financial year was characterised by capacity constraints for PMP, the company expects to be running at full capacity by the end of November. "We don't expect to be capacity constrained in the first half of fiscal 2006," says Allely.

PMP expects the relocation and upgrade of its printing site in Adelaide, from Netley to South Salisbury, to reach completion by the third quarter of fiscal 2006, slightly ahead of schedule.