Four in five printers working under capacity in disappointing quarter

Four in five printers working under capacity in disappointing quarter
Caitlin Fitzsimmons, printweek.com, 22 June 2007

The print industry had a tough start to the year, with spring failing to deliver the expected recovery in demand, a new report suggests.

Directions, the BPIF survey of industry trading trends, shows many respondents became too enthusiastic about the outlook for the industry after generally encouraging results in the autumn and winter.

Many respondents reported that the March-May quarter failed to meet expectations, while the proportion of firms working below capacity increased to nearly four in five (78%) from just over three in five (62%) the previous quarter.

Nearly one in four (24%) respondents said order books were worse than normal for the time of year, compared with one in five (21%) last quarter, while the proportion of firms reporting order books better than normal fell from 38% to 31%.

However, printers remain optimistic about the upcoming trading period and predict that ongoing consolidation in the industry - through both acquisition and weaker firms going into liquidation - will relieve the competitive pressure.

BPIF corporate affairs director Andrew Brown said the pace of change in the industry provided opportunities for progressive management.

"Although the results this time around were disappointing compared with the last two quarters, it is encouraging to see that printers are reasonably optimistic about the period ahead," he said.

"It is clear that rationalisation continues to take its toll on the industry, creating further opportunities for companies seeking mergers or acquisitions."

Many small to medium-sized general commercial printers signalled their plans to acquire other businesses, recognising that organic growth is difficult, but growth and economies of scale can be achieved through strategic acquisition.

Printers also plan to increase capital expenditure on plant and machinery in the coming year, with many companies either investing in digital for the first time or enhancing their digital capacity.