Printing industry trends are on the rise but gloom prevails

Seasonal factors rather than any underlying changes in the industry dynamics have produced the good result. According to Hagop Tchamkertenian, Printing Industries Manager of Industry and Commercial Policy, the second half of the calendar year has traditionally been a busy quarter in terms of business activity and the September results confirms the influence of seasonal factors.

But nothing can shift the industry’s gloomy view of the future with the key barometer of business confidence not responding to the better trading conditions.

“The general business expectations indicator did improve during the quarter [but] it remains significantly lower when compared to the same period a year earlier implying that businesses in the printing and associated sectors are less confident now about business prospects then they were 12 months ago,” reported Tchamkertenian.

Increased costs competing with reduced selling prices continue to make life tough in the trenches.

According to the Printing Industry Trends survey report, other important September 2004 quarter developments include:

Increased employment and overtime levels;

Reduced selling prices;

Increased investment in plant and machinery;

Finance reported more easier to obtain but labour availability was reported to have deteriorated;

Increases reported across all cost categories; and

Better than expected net balance for outstanding debtors.

On the critical issue of capacity utilisation rates, the September 2004 quarter results show that 70.8 per cent of respondents were operating at capacity levels of 70.0 per cent or over, up from the 61.4 per cent proportion reported last quarter and the 62.9 per cent level reported this time last year.

The September quarter saw 75.2 per cent of the survey respondents ranking lack of orders as the primary barrier to increasing production levels, an outcome that is lower than the 88.2 per cent proportion reported during June 2004 quarter, and the 82.5 per cent proportion reported during September quarter 2003.



Tchamkertenian maintains that despite the low confidence levels industry respondents believe that the strong trading conditions will continue at least into the December 2004 quarter.

According to the respondents the December 2004 quarter is expected to yield the following results:

Net balance increases in orders, production, sales and net profits;

Recovery in selling prices;

Reduced availability of finance and labour;

Increased employment and overtime levels;

Further increases in all production cost categories - average wages, other
labour costs, and average material costs;

Unchanged stock levels; and

Increased number of outstanding debtors.

Over the next six months (December 2004 quarter and March 2005 quarter) the respondents are forecasting:

Increased investment activity in plant and machinery;

No change in investment activity in buildings.

The outlook for general business expectations over the next six months remains favourable across all states with the most optimistic state being Queensland. The September quarter also revealed that the highest capacity utilisation rates were reported by respondents from Victoria and New South Wales.

As for the product sectors, high capacity utilisation rates were reported during the September 2004 quarter by the following sectors: cheques and securities, folding cartons, greeting cards, calendars and diaries, and books, magazines, periodicals and newspapers.

Considerable levels of excess capacity seem to exist in the business forms and continuous stationery, graphic reproduction, screen printing, quick printing, labels and desktop publishing sectors.

According to Tchamkertenian also added that the vast majority of product sectors are forecasting improvements in business conditions over the next six months.

Capital expenditure intentions remain positive with only two sectors – business forms and continuous stationery and quick printing forecasting reductions during the December 2004 quarter and March 2005 quarter.

“The September 2004 results are pointing to the emergence of some interesting trends,” said Tchamkertenian. “Labour availability is once again becoming an acute problem for more and more companies, and cost pressures seem to be building up once again given the sharp rise in the number of companies that reported increased material cost pressures.

“The one surprising result concerns outstanding debtors, which resulted in the actual figures reported coming in below the expected outcome – the first such result since June quarter 1993 This is a good result and reflects a greater degree of cash flow management among printers, driven perhaps by more aggressive supplier terms of trading,, ” he said.
Any one interested in obtaining a copy of the full survey report can contact Printing Industries-. Hard copies of the report cost $15 for Printing Industries-. members and $30 for non-members.

Electronic copies of the report are also available on request and cost $15 for members and $30 for non-members.

For further information contact Hagop Tchamkertenian hagop@printnet.com.au