He adds that the first half result includes equity accounted profit from the company’s 25 per cent share in Promentum Limited as well as a $2.9m actuarial gain from the company’s Defined Benefit Superannuation Plan.
Referring to previously high earnings in 2005, Evans told corporatefile.com.au, "A combination of improved market conditions, particularly in our core printing business, and further cost savings would be required for the company to return to that level of earnings. We’re well placed to benefit from any improvement in market conditions due to our state-of-the-art printing presses."
EBIT (before significant items) for the half was $50.1m, an increase of 24.9 per cent over the pcp. Chairman, Graham Reaney, says the first half net profit represents a continuation of the improved trend recorded in the January to June 2006 period.
Whilst group sales increased by a modest 1.5 per cent to $665.6m, the improved profitability was driven by the continuing and increasing level of cost reductions and production efficiency gains commenced in early 2006. These trends are expected to continue throughout 2007.
Earnings per share increased from 6.1 cents in the prior period to 9.4 cents and net debt continued to reduce from $345m (June 2006) to $320m.
Evans says all divisions recorded improved results with Print in particular achieving a stable operating base and improved customer service after the disruption caused by the installation of new equipment last year.
Print throughout increased by 4.7 per cent and EBIT was up 16.9 per cent to $43.3m driven mainly through cost reductions in a very competitive marketplace. Last month it was announced that Promentum Limited, in which PMP has a 25 per cent shareholding, had received a takeover offer which values the PMP stake at approximately $32m. PMP supports the takeover which is expected to close by late April 2007.
PMP Distribution (incorporating both letterbox and magazine distribution) delivered a 54.1 per cent growth in EBIT to $8.5m, on a 5.9 per cent increase in revenue to $283.8m. Gordon & Gotch benefited from new warehouse technology leading to reduced costs and operational efficiencies. Introduction of GPS-based catalogue distribution led to an improvement in DIFOT (delivery in full and on time) performance in New South Wales.
PMP Digital Premedia recorded a 29 per cent growth in revenue to $27.6m and lifted EBIT to $4.5m from $1.9m over the pcp. Reveenue growth was attributed to strong demand for digital preprint and related services.
In a statement to the Australian Securities Exchange (ASX), PMP says it has made considerable progress in the current half during which it has lowered its costs base, improved customer service and strengthened its balance sheet.
Evans says that whilst he expects continuing competitive market conditions in the printing industry, a continuing focus on cost and operational efficiencies will be critical to improved profitability and return on funds employed. Continued improvements are expected in PMP Digital Premedia. "We also expect further improvements in PMP Distribution as the national rollout of the GPS technology continues," says Evans.
Subject to completion of the sale of its Promentum shareholding by June 20 2007, Promentum forecasts net debt to reduce to less than $260m with a debt to equity ratio of less than 100 per cent and the restoration of balance sheet growth.
Further to the PMP chairman’s address at its annual general meeting, PMP indicates it is in discussion with private equity. "Over the first half, PMP has continued to facilitate private equity interest, consistent with the snterests of its shareholders," continues the statement.
"PMP has also continued to focus on various business programmes and initiatives which have con tinued to increase shreholder value.
"In line with previous statements, PMP does not anticipate receiving any formal private equity proposal until late March 2007. PMP notes that a formal private equity proposal ultimately may or may not be forthcoming," it concludes.