Slowdown Puts Pressure On Printers

Sydney Morning Herald

Saturday November 8, 2008

Miriam Steffens

THE printing company PMP has warned its shareholders they can expect dividends only once a year and at lower levels than before as it braces for tougher times ahead.

The company says that its 2008-09 pre-tax earnings will fall from last year's $85.1 million because of problems integrating its acquisition of Times Printers in Melbourne and sluggish demand in New Zealand, which have pushed earnings down by $6 million in the first four months.

How much profit will drop "will be determined by the extent of the economic slowdown", PMP's chairman, Graham Reaney, told shareholders in Sydney.

The company has brought in external consultants to target cost cuts and find ways to make up for falling volumes.

PMP shares closed 5 cents lower at $1.02, down 43.5 per cent this year. Mr Reaney declined to comment on the timing of $427,000 worth of share sales by his family company last month.

Shareholders will receive only between 2 cents and 3 cents in annual dividends for the foreseeable future. The size of the payout will depend on how much in franking credits the company can get.

Last year it paid out 4.5 cents - it had only started dividends again last year after a five-year suspension.

Shareholders criticised the new payout policy.

"Some of us have been very long-suffering shareholders; we have been going without dividends for many years," one said.

PMP bought Times Printers from Singapore's Times Publishing last year. PMP's chief executive, Brian Evans, told the Herald the company had struggled moving the Times equipment to its Clayton plant in Victoria as order volumes came in stronger than expected during the transition.

Although contracts in New Zealand have suffered from that country's recession - pages of real estate catalogues are down 50 per cent - PMP was still feeling "strong demand" in Australia leading into Christmas, he said.

PMP is talking to retailers such as Harvey Norman, which foresees a 20 per cent cut in its ad budget, to cut page sizes and find other ways to lower costs.

Asked about the move by one of the biggest clients, ACP Magazines, to build its own printing plant, Mr Reaney said it was not cast in stone that ACP's owner, PBL Media, would go ahead.

Since the time of planning, the falling Australian dollar would have raised the cost of equipment, and market conditions had become less attractive, he said.

© 2008 Sydney Morning Herald

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