PMP to wait for profits to return

Publishing and direct marketing giant, PMP, does not expect profit growth to return to its balance sheets until the second half of the financial year ending 2012, it has been announced at the company’s annual general meeting this week.

Outgoing PMP chairman, Graham Reaney warned shareholders that restructuring investments and a continued soft market will result in a drop in profit growth in the first half of 2012, with an increase not expected until the second half of the financial year.

“When taking into account the likely short-term continuation of difficult market conditions…the guidance we are currently able to provide towards the full year EBIT before significant items is that it is likely to approximate last year’s EBIT of $56.7M,” said Reaney. “EBIT for the first half will be lower, on the back of difficult market conditions and the loss of the Pacific [Magazines] contract.”

Restructuring developments in New Zealand are expected begin delivering returns by late next year.

“In the second half, the transportation plan savings will flow through primarily from New Zealand, and we expect H2 EBIT to exceed H1,” said Reaney (pictured).

The announcement follows what has been a difficult year for PMP, with the closure of publishing company Scribo and natural disasters in Queensland, Christchurch and Japan impacting some of the company’s operations.

Although PMP’s pre-tax earnings were up 8.5 per cent to $56.7 million in the financial year ending 2011, it recorded an overall net loss of $11.3 million.

However, despite these setbacks, the company is still spending up big on investments. PMP spent $24 million on a new press in WA – almost as much as it lost from the Scribo closure – and hopes to pay pack its $55 million transformation investments within the next three years.

Despite falling print revenues, the company expects its multi-channel marketing services to increase overall profit, particularly its digital services.

“The rise of the internet and digital media has led to an explosion in marketing channels,” said PMP CEO Richard Allely. “PMP already has the experience and technology to answer these questions.

“Under the guidance of our recently appointed executive general manager, Dr Anna Cicognani, PMP’s refocused Marketing Services business will develop new product lines and services for the marketers of the future.”