Sheetfed operations drag down revenue for Blue Star
New NZ magazine printing investment on the cards to service ACP Media New Zealand printing contract that includes all of ACP’s consumer magazines, including New Zealand Property Press, Woman’s Day, and The Australian Women’s Weekly.
A strong six-month finish put a good gloss on the results of Blue Star as it battles decreased volumes, especially in its sheetfed operations, which make up 44% of total revenue. Its annual report shows overall sales revenues for the year down to NZ$569.2 million, a decline of 1.5% over the prior year.
The PE-backed trans-Tasman group posted a 14.6% increase in EBITDAR to $42.9 million in the 12 months, which led Chris Mitchell, managing director, (pictured), to say: “The result is encouraging and a clear demonstration of the viability of the strategies implemented by management to create a robust platform in the current business environment.”
He described the industry conditions as challenging, especially in sheetfed printing. However, in talking with Print21, he did flag Blue Star’s intention to establish a heatset web magazine operation in Auckland to take care of the newly won ACP contract. This would be a major investment in the company’s already strong web division. It will have little impact on 2011 results but bolsters the group’s web business for the future.
In a company announcement the sheetfed sector was described as been most impacted by the global financial crisis, resulting in reduced print volumes, market over-capacity and resultant margin compression. It noted the number of business failures in this sector, particularly in Australia, as well as the significant cost reduction programmes already implemented by the Group under its transformation programme.
A strong six-month finish put a good gloss on the results of Blue Star as it battles decreased volumes, especially in its sheetfed operations, which make up 44% of total revenue. Its annual report shows overall sales revenues for the year down to NZ$569.2 million, a decline of 1.5% over the prior year.However Mitchell described the overall result as encouraging. “[It is] a clear demonstration of the viability of the strategies implemented by management to create a robust platform in the current business environment.”
He singled out the continued strength of the web, label and print management businesses.
“These divisions have responded well to investment in recent years as well as management initiatives and are all positioned very strongly in their respective markets. Management see further opportunities to develop and grow in these parts of the business over the coming year.”
He said significant steps have been made to improve and reposition the business so as to meet the challenges facing the print industry. “Whilst there is reason to be optimistic, there is no quick fix. Blue Star’s strong market position, its solid cash flow conversion, modern asset base, loyal customers and the commitment of its staff alongside the ongoing support of Blue Star’s shareholders and lenders, have all combined to provide Blue Star with an environment which is conducive to ongoing transformation.”
Financially the group kept a close focus on cash management with senior debt net of cash balances reducing by $12.9 million. It maintains that ongoing earnings improvement and senior debt reduction demonstrate BSGH’s ability to improve its senior leverage ratio. Interest payments to bondholders remain in suspension. Interest will continue to accrue to investors at the step-up interest rate of 13.1% per annum compounded quarterly