Floating or sinking?

Listing on the stock exchange is one sure way to raise capital for print companies – at least those at the big end of town. Because they are so capital intensive, it’s a tempting proposition. But listing a company brings its own challenges, with shareholders expecting increasing returns and dividends every year.

Printing companies face the dual challenges of razor-thin margins and the need to invest in what is a particularly capital-intensive industry, with a premium on top-line machinery and technology. It’s not a recipe for easy profit rises, which makes a listed position all the more daunting. Firms that can’t demonstrate a good return on capital will be punished by the market. Some even say the fragmented printing industry, hit hard by the digital revolution and business being outsourced overseas, is not suited for listing on the stock exchange at all. The jury is out.

A handful of major print companies are on the ASX. The printers themselves are PMP (PMP), McPhersons (MCP), Salmat (SLM) and Wellcom (WLL), while on the supply side, Paperlinx is the most obvious example (PPX). Other related companies on the stock exchange would include outdoor advertising company Ooh Media (OOH) as well as print and publishing giants Fairfax (FXJ) and APN (APN).