PMP downgrades earnings forecast as volumes and orders fall

At its annual general meeting in November, PMP had predicted earnings before interest and tax  and before significant items of $56.7 million.

However, in a statement released to the ASX today, PMP revised the figure to $43-47 million, a drop of 17-24%.

Chief executive Richard Allely told ProPrint the downgrade had come because both major clients and second-tier customers had reduced their print commitments for the second half of the financial year.

"I don't see signs that is going to be improving over the next six months. In fact I think that's going to continue to be challenging for volumes," he said.

The unexpectedly poor market conditions would mean $5 million worth of restructuring "not envisaged at the time of the AGM", added Allely.

The announcement comes after years of restructuring across PMP's Australian and New Zealand businesses, and is in contrast to Allely's comments last August, when he told ProPrint: "The short answer is we won’t have significant items next year. In fiscal 2012, we are not doing any more restructuring. We have done our restructuring."

Today, he told ProPrint that PMP had to cut its costs to reflect falling demand, otherwise "you're simply going to record lower and lower profits".

That wouldn't necessarily mean job cuts or only job cuts, Allely told ProPrint. It could also involve changing the mix of equipment and locations.

He said the company had planned for all contingencies and would be able to react according to market conditions.

Allely said there had been a significant downward trend in the print market in the past 12 months, but it was unclear how much was due to a weakening economy and how much to structural change in the industry.

Despite the earnings downgrade, Allely described PMP's future as bright.

"PMP has got a very strong balance sheet. We've probably got the strongest balance sheet of any printer in the country," he said.

"Our debt levels are the lowest they've been in over a decade. The business can weather this market better than anyone else."

Meanwhile, executive general manager Graham Plant has left PMP as of yesterday.

Plant told ProPrint he had resigned because he felt PMP needed new blood to expand its marketing services division, which is being led by Anna Cicognani, who joined last October.

"I've been at PMP for eight years and enjoyed my time there and we've departed as friends."

Plant said he had also wanted to take advantage of the chance to start a new business, which would partly involve working to ensure the viability of the printing industry.