Losses widen at printing firm due to tough market

Losses have widened at Manchester based printing firm Grafenia due to increasing costs.

The company said in its half year report there was an operating loss of £1.36m compared with a loss of £470,000 last year.

This meant there was a pre-tax loss of £1.44m compared with £490,000 last year.

The company is in the process of introducing a transformation strategy.

The firm is building up its Nettl Business Stores and licencing our brands.

A statement said: “During the period, revenues have grown in all of those segments and we’re increasingly confident in the merits of our transformation strategy.

“However, we continue to battle against certain headwinds, as our costs have been increasing and margins eroding in other parts of our business.

“Trade print has got tougher and prices are still falling. To address this we aim to become less reliant on litho trade print every day.

“We do this by scaling our company-owned operations that sell to end clients, broadening our product offerings (into areas like signs, ink on fabric and web services) and adding new brand partners who pay licence fees to use our platform and brands.

“Almost all of our raw materials are sourced from Europe, or paid in US Dollars. Like the majority of printers, we’ve suffered from increased pricing on paper, our biggest raw material purchase.

“This has been exacerbated by demand for paper pulp created by the packaging industry and the drive to move away from single-use plastics.

“Secondly, the margin characteristics for sign production are different to litho printing. As signage becomes a larger part of our business, we would expect the percentage to change in line and move closer to 50%.

“Thirdly, despite rising costs, wholesale print prices continue to fall as competitors discount to grow market share. We monitor market pricing and take defensive action to maintain competitiveness.”
Overheads increased to £4.63m compared to £3.45m in the same period last year.

Much of this increase relates to businesses which were acquired during the year.

The board continues to look for M&A opportunities in the sign space, that would, if they should materialise, change the size and structure of the Group materially.

However, given the political and economic situation, the firm remains cautious on quantifying the outlook.