UK print firms see trading improvement

The British Printing Industries Federation (BPIF) has revealed that 62 per cent of firms reported a pick-up in trading conditions, according to a Printing Outlook survey report published by the BPIF.

BPIF added that only 10 per cent of those companies asked saw a deterioration in trade.

The latest survey was carried out online during the period 1-11 December 2009.

one hundred and nine companie, with a collective annual turnover of over GBP1.0 billions responded to the survey.

While welcoming the improvement, the BPIF has warned that the improvement is seasonal and that survey respondents do not expect this boost in trade to continue into the normally slower winter period.

BPIF added that 56 per cent of respondents in the survey expected activity to decline between the beginning of December 2009 and the end of February 2010.

However, export trade is expected to buck the slow-down, reflecting relative improvements in overseas economies, but prospects for domestic demand will remain weak for the next three months.

The BPIF said that with only nine per cent of print businesses confident about winning new business, compared with 47 per cent predicting a reduction, production levels are also expected to decrease.

Fifty-one per cent of respondents predicted a decline in output, as against 17 per cent expecting a rise.

The Autumn 2009 increase in trade has helped to improve profitability among print firms, added the BPIF.

Just three per cent are loss making (compared with 17 per cent three months ago), while the number in the 4.5 per cent - 7.5 per cent range jumped to 40 per cent compared with seven per cent at the time of the last survey.

However, the BPIF said that it is uncertain whether that could be sustained as 55 per cent of respondents believed margins will narrow over the coming three months, which compares with nine per cent expecting improvement.

The majority of UK printers (86 per cent) still report having spare capacity, a situation that will probably worsen over coming months.

Some improvement in numbers employed was reported in the autumn, but this reflects the hiring of temporary workers rather than a long-term shift in demand for labour and employment levels are still projected to fall further, said BPIF.

However, it does appear that the rate of job cuts is moderating.

The survey report, according to the BPIF, has revealed that competition remains tough with no signs of upward price movement; in fact further cuts are expected by a third of firms.

No printer raised prices - the first time that this has been recorded since the first quarter of 1991.

Not surprisingly, margins remain under pressure as a result, with almost half of printers (47 per cent) reporting no change in margins over the past three months.

That said, 21 per cent reported an improvement: the best reading from the survey for a year.

BPIF added that the fact that costs were contained for the majority of print firms during the autumn has certainly helped: although 31 per cent reported that paper and board costs had risen over the past three months, 69 per cent said they were paying no more and no less than before.

In the run up to the Ipex 2010 exhibition in the UK, BPIF said that it is interesting to note that investment plans are being reviewed as the credit squeeze starts to ease.

The change seems to fit with the start of an improvement in bank lending, albeit from a low base.

Credit lines appear to be returning, bad debt seems to be on the wane, and the availability of bank lending is reported to be improving to a limited degree.

However, the real cost of borrowing may still be prohibitive for many and the uncertain state of trade may still delay investment decisions and borrowing requirements.

BPIF's corporate affairs director, Andrew Brown, said: 'The normal boost in trade that we have come to expect in the printing sector in the run up to last Christmas didn't happen at all last year and so the uplift reported by respondents to our autumn survey is very welcome news indeed.

However, it is important to remember that this improvement is due to seasonal factors.

Uncertainty about the prospects for the winter months is clearly reflected in less sanguine forecasts for this period, with 56 per cent believing that trade will worsen, compared with just 15 per cent that believe the recent momentum will continue through the winter.

Trading conditions remain extremely testing.

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