PMP expects $19M annual cost savings by shrinking NZ printing plants to 3 from 7

Friday 4th November 2011

PMP, the magazine printing and distribution company, expects to save as much as $19 million a year from a New Zealand strategy that will cut the number of workers by a fifth and consolidate to three sites from seven.

The company unveiled the transformation plan at its 2010 annual meeting. It will reduce to two plants from five in Auckland and to one plant from two in Christchurch. The number of workers will fall to 583 by the end of January next year from 741 when the strategy was announced in November 2010. The company declined to say how many jobs have already been shed.

The permanent headcount in its New Zealand printing business will reduce to 299 by the end of January next year from 393 at June 30, 2011, the company said in an investor presentation yesterday.

PMP is forecasting annual cost savings of $10.9 million in its 2012 financial year and $19 million in 2013 year when compared to the 2011 financial year, it said in the presentation.

The company that was previously run by former All Blacks captain David Kirk says it is changing from being a commodity contract printer with inflexible, high cost assets located in fragmented sites into a value-added supplier of marketing, printing and distribution services.

The transformation of the New Zealand business has been under budget and its benefits are in line with expectations.

After significant items of $A52.2 million, PMP recorded a loss of $A11.3 million in the year to June 30, 2011.

This included $A26.5 million of one-off costs from the Australia and New Zealand transformation, mostly relating to site relocations, redundancies and lease obligations at existing sites in Auckland and the impairment of plant and equipment.

The New Zealand business had flat revenue and earnings before interest and tax fell 13.1 percent.

The majority of the transformation in New Zealand has been in the heatset printing business. The restructuring is scheduled for completion by the end of January 2012.

In November 2010, the heatset business secured a 10 year agreement with New Zealand Magazines, after APN News & Media Ltd exited the printing market. PMP also picked up the majority of APN’s remaining customers and a press and finishing equipment, which have been installed at the new site at Auckland Enterprise Park.

The company has 70 percent of the heatset market in New Zealand where its competitor is Webstar. It has 11 percent of the sheet fed commercial printing market where Blue Star and Geon are competitors.

(BusinessDesk)

BusinessDesk.co.nz

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