Printing.com upbeat despite profits fall
PRINTING.com, the AIM-listed international printing business said it had been hit by a lack of confidence among its SME customer base as annual profits fell 13% to £1.47m.
The Trafford Park, Manchester-based company which has 288 stores, the majority in the UK and under franchise, said it hoped an acquisition last November and the launch of new online products would drive future growth.
Revenue in the year to the end of March was up 17.7% to £17.02m – a figure boosted by the acquisition of Rotterdam-based Media Facility Group for £1.78m.
After acquisition costs profits were £1.31m, although the group held the dividend at 3.15p.
Chief executive Tony Rafferty described the 2010-11 financial year as “challenging” and said there had been little improvement in April as a result of the disruption to trading caused by Easter and the Royal Wedding. Trading in May had bounced back to more normal levels he said.
Printing.com said it had detected significant regional variations in its core UK business. Revenue from stores in London and the South East was up 5.1%, while in the other regions it was down 1.8%. In total UK sales fell from £13.6m to £13.4m.
Mr Rafferty said: “We remain of the belief that the difference is due to increased confidence within the SME community across the London and South East region.
“We believe that this indicates that the underlying demand for the Printing.com service will strengthen as and when economic conditions improve.”
The company, which also has small operations in France, Ireland, the US, New Zealand, said it had invested in software to roll-out online, template-based applications.
A template for larger business, BrandDemand. was launched in the UK during the year, with positive early results, and is now being rolled-out in France and will soon be launched in the Netherlands and Ireland.
A template for SME clients – Flyerzone – will be launched in the UK later in the summer. It aims to tap in to demand for high quality graphic design, combined with the efficiency and cost-effectiveness of the online environment.
Looking ahead Mr Rafferty said: “Over the past year, we have dedicated a lot of time and resource to developing the online initiatives which, we believe, have been well received by both current and prospective clients.
“We further believe that these new initiatives, coupled with the acquisition of MFG, will be important to the long-term growth of Printing.com and your board remains confident in the company’s future prospects.”
John Lienard, an analyst from the firm’s in-house brokers Brewin Dolphin, maintained a Buy recommendation on the company’s stock and a 44p price target (it is currently trading at 36p), despite downgrading turnover and pre-tax profit targets for 2012.
However, he said the company’s strong cash generation and a yield of 9% remained key attractions.
