Trading conditions slump in June quarter, reversing previous gains

According to Hagop Tchamkertenian, Printing Industries manager of industry and commercial policy, the latest survey results reveal that industry trading conditions deteriorated across a number of key economic indicators such as orders, production, sales and net profits.


He said the June 2004 quarter result represents further evidence of changing industry dynamics. “The quarter has traditionally been a busy time for our industry in terms of business activity. But recent survey feedbacks indicate that this year it’s been disappointing in terms of trading conditions.

“And while the key barometer of business confidence, the general business expectations indicator, did improve during the quarter 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.”

Other important June 2004 quarter developments reported by the survey respondents include:

Reduced employment and overtime levels;

Reduced selling prices;

Reported increased investment in plant and machinery;

Finance reported more difficult to obtain but no change reported in availability of labour;

Reported increases across all cost categories; and

Worse than expected net balance for outstanding debtors.

On the critical issue of capacity utilisation rates, the June 2004 quarter results show that 61.4 per cent of respondents were operating at capacity levels of 70.0 per cent or over down from the 70.3 per cent proportion reported last quarter but up from the 57.5 per cent level reported this time last year.

The quarter also saw 88.2 per cent of the survey respondents ranking lack of orders as the primary barrier to increasing production levels, an outcome that is higher than the 85.2 per cent proportion reported during March 2004 quarter, and the 85.6 per cent proportion reported during June quarter 2003.

Despite the reported deterioration in trading conditions, industry respondents are optimistic of strong trading conditions for the September 2004 quarter.

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

Net balance increases in orders, production, sales and net profits during the September 2004 quarter;

Recovery in selling prices;

Increased 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;

Increased stock levels; and

Increased number of outstanding debtors.

Over the next six months (September and December 2004 quarters) the respondents are forecasting:

Increased investment in plant and machinery;

Reduced investment in buildings.

With the exception of respondents from Tasmania, the outlook for general business expectations over the next six months remains favourable. The most optimistic state over the outlook period is Queensland. The June 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 June 2004 quarter by the following sectors: Cheques and Securities, Labels, Folding Cartons, Other Packaging and Paper Converting and Greeting Cards, Calendars and Diaries. Considerable levels of excess capacity seem to exist in the Business Forms and Continuous Stationery, Graphic Reproduction, Screen Printing, Desktop Publishing, General Promotional and Commercial and Book Binding sectors.

Tchamkertenian 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 while five sectors – Labels, Business Forms and Continuous Stationery, Graphic Reproduction, Folding Cartons, and Screen Printing forecasting reductions during the September and December 2004 quarters.


Companies participating in the survey employ a workforce of more than 10,000 people from 15 printing and associated sectors covering the printing industry value chain.


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.