ASX-listed Spicers says a challenging commercial print market in Australia caused a fall in sales revenue in the six months to December 2016.
Revenue was down 3.7 percent on the previous corresponding period (pcp) to $195.2 million. The paper merchant posted a half year profit after tax of $3.6 million, compared to a profit of $6.3 million pcp. Net cash inflow from operations was $0.2 million, a positive compared to an outflow of $22.3 million in the pcp.
Spicers - formerly PaperlinX - told the ASX the fall in revenue reflected ongoing structural decline and challenging trading conditions in the commercial print market, particularly in Australia.
Declining Commercial Print revenues were partly offset by solid growth in diversified revenue streams, with strong contributions from the Sign & Display and Pressure Sensitive Labels product categories.
Group underlying EBIT for the six months to December was $3.3 million versus $3.2 million for the pcp. Improved performances against pcp from the New Zealand and Asian businesses offset weakness in the Australian result.
Trading conditions in Australia were challenging, particularly in the Commercial Print market due to ongoing structural decline.
Net sales revenue [in Australia] was down 5.9% pcp, primarily due to declining volumes and competitive pressure on pricing in the Commercial Print category.
Statutory profit after tax was $3.6 million, below the pcp result of $6.3 million due entirely to non-recurring items related to the discontinues previous operations in Germany.
“While trading conditions in our core commercial print markets continue to be challenging, particularly in Australia, we have been able to maintain overall group earnings with good results from the New Zealand and Asian businesses,” says Spicers CEO David Martin.
The company is making ‘steady progress’ on a plan to end the long-running dispute with PaperlinX hybrid shareholders.
In December, Spicers entered into an agreement with The Trust Company (RE Services) – the Responsible Entity overseeing the $285 million PaperlinX Step-Up Preference Securities. The deal, conditional on a vote by both existing equity owners and preference securities holders, would see the hybrid-holders take a 68.3 per cent stake in the company.
“We have received generally positive feedback from both ordinary shareholders and SPS unitholders since we announced the signing of the SIA in December 2016,” says Spicers chairman Robert Kaye. “In the board’s view, the benefits of completing the restructure remain clear and compelling. We will work closely with major stakeholders over the next two months in the lead up to the general meetings in April, as ultimately the successful implementation of the proposed transaction is in the hands of both sets of security holders.”