PMP downgrades profit guidance, sharpens cost-cutting axe

BUSINESSDESK: Australia-based printing and distribution company PMP has again downgraded its annual profit expectations and is planning even deeper cost cuts.

PMP now expects earnings before interest and tax (EBIT) for the year ending June 30 will be between $A30 million and $A33m before significant items.

The company also operates in New Zealand, printing magazines and advertising materials for companies such as Fairfax Media, New World supermarkets and Sky Network Television, and distributing magazines through its Gordon & Gotch subsidiary.

In February, the company downgraded its guidance for annual EBIT given at last year's annual shareholders' meeting by 20% to between $A43m and $A47m before significant items.

Its first-half EBIT fell 28% to $A23.1m and net profit after writedowns, including to its New Zealand operations, fell to $A4.6m.

PMP reported $A56.7m EBIT before significant items and an $A11.2m net loss for the year ended June 30, 2011.

When it reported these results in August last year it said it was “optimistic” about the outlook for the current year.

“Trading results for March were circa 20% below forecast,” the company said.

Its fourth-quarter forecast “now indicates lower than expected volumes due to a further deterioration in demand from the retail and publishing markets".

"It is evident this is a combination of structural issues, economic drivers and deferral of advertising spend into the first quarter of fiscal 2013,” it said.

As already reported, PMP has been cutting costs and has now expanded its target for the second half to annual savings of more than $A40m compared to its February target of $A8m.

The company said non-executive director Peter George has resigned from the board to become chief operating officer “to assist with the acceleration of the transformation of the Australian print business”.

In 2009, Mr George had been interim head of the print business.

Earlier this month, PMP announced it had made print and distribution executive general manager Andrew Williams redundant and that chief executive Richard Allely was taking direct control of the Australian print and distribution businesses.

Yesterday, PMP's shares fell as low as 29 Australian cents and have been trending lower from $A1.07 in December 2010.