Page 15 - Print 21 Magazine March-April 2019

Web Printing
magazine plant at Silverwater, along with a Heidelberg Sunday press transferred from the closed AIW plant in Melbourne.
The catalogue printing Franklin Web site in Sunshine now boasts a big Goss 80-page, once the largest presses in the country, that also came from the closed AIW plant. It takes its place alongside two 80-page manroland Lithoman presses and
a KBA Comet. This latter stands as an aberration in the sector, one that Phil Taylor was ambivalent about for many years.
The decision by IVE Group to expand the Franklin Web brand into Sydney with a $50m site at Huntingwood is in response to the need for a national footprint to service the massive Coles catalogue contract it won from Ovato. Two brand new 80-page manrolandGoss Lithomans represent a massive increase in capacity in the sector. They print in a near ‘hands off’ automated environment, in what industry observers are pointing to as a new era in printing production. Operating 24/7, the plant is able
to churn out four million pages an
Leveraging investments: Geoff Selig, executive chairman, IVE
of the catalogue game is cost per page, and to compete requires the latest technology.
As the two big groups in the heatset web-printing sector settle down for some serious long-term competition, it’s worth remembering there are still alternatives. Spot Press (see story p19) in Sydney is not about to invest in a new press, but its Goss press power is perfectly capable of pumping out quality colour heatset newspapers, magazines and inserts.
Sydney-based Access Print Solutions bought Graphic Print Group, the SA Cadillac Printing business, in 2015. Its GraphicWeb business provides a useful regional resource for local catalogues, newspapers and magazines.
Then there are the big newspaper plants that have largely converted to heatset presses. They produce their own magazines and inserts and also compete for commercial work. Their presence, as much as anything else, means the ACCC has no concerns about a lack of competition in heatset web printing. It may not be a zero sum competition anymore but it’s still one of the fiercest fought. 21
hour, under the supervision of just ten staff. There is one printer for each press per shift with another switching between the two.
IVE’s new Huntingwood plant forced Ovato to revisit its press investment strategy. Despite having previously said there were no new presses on the horizon, a new manroland Goss Lithoman 80-page web is due to go into Warwick Farm at the old IPMG site mid-year. It will lead to the retirement of five older web presses, transforming the plant to a similar level of automation as its rival.
It may seem counter intuitive
to be buying new presses while blaming over capacity for the sector’s problems. However the new generation presses are faster, more efficient and productive. The name
Results reveal tale of two companies
The half year results just out show that IVE is now the biggest printer in the country, with sales of $375m compared with $363m at Ovato. However the raw sales cover all activities within the groups. IVE has sheetfed and digital printing as well as heatset web, Ovato operates in New Zealand as well as Australia.
Ovato is now closing its Moorebank site in response to declines in the real estate, magazines and catalogues markets.
In the first half of the current financial year Ovato saw its revenue slide by $37m, down by 9.2 per cent to $363m. It is printing 11 per cent less paper, at 142,200 tonnes.
The company has a cautious outlook for the second half of the year which it says
is “reflected in a reduction in H2 forward bookings for newspapers, magazines
and non-food and beverage catalogue customers.” It says the outlook for Tier 1 food and beverage catalogues remains
“in line with previous expectations.”
Ovato Australia catalogue print and distribution volumes are forecast to continue to reduce by 2 per cent to 3 per cent a year, while the rate of decline in publishing volumes is set to stabilise with reductions of 5 per cent to 10 per cent annually.
Ovato Print Australia sales that were down by 12.9 per cent to $213m, the figures reflecting operational efficiencies
achieved in tough trading conditions. By contrast New Zealand Print struggled on overcapacity impacting pricing, sales were 2.8 per cent down to $62.6m.
The company said its Australia Print revenues were lower mainly from $6m of catalogue work lost due to the sale of one of its customers, and $6m of lost magazine contracts. It saw a decline in catalogue revenue from customers who closed
their businesses, this was $2m against pcp. There was $13m of lower magazine and newspaper volumes from existing customers, due to the weaker real estate market and reduced advertising pages. Its Tier 1 existing customer catalogue volumes and sell prices have remained stable compared to last year.
Heatset profit was up $3m pcp as operational savings around labour costs, ink and R&M, and lower headcount, more than offset the impact from lower sales volumes and higher paper prices.
While print volumes were flat year on year several major print contracts were re-signed with sell price reductions, due to aggressive competition. In addition higher paper prices were not fully recouped.
IVE saw all figures rise in the first half of the year, as its senior management lauded its investment into print, and said the heavy lifting phase was behind it.
IVE, which has multiple divisions including print businesses Blue Star – which has web, sheetfed and display print operations – and Franklin Web, achieved revenue up by 4.5 per cent to $375.6m.
Speaking to Print21 IVE executive chairman Geoff Selig said the company was now realising the returns of its strategic initiatives implemented
over the past two years. He said, “The company is positioned to leverage off its investments, and deliver solid results in the forthcoming period.”
Chief financial officer Darren Dunkley told investors there would be no significant capex in the 2019-2021 period.
The $16.3m revenue increase in the half year was due to new customer wins, cross selling to existing customers, key contract extensions, and revenue for the full period from its prior acquisitions.
Selig said: “In October 2018 we concluded the most significant investment programme the sector has seen for many years, a huge vote of confidence in the sector itself, and in our capacity as a business to execute major initiatives successfully.
IVE Group MD Warwick Hay said: “With the heavy lifting of our recent investment and integrations phase now behind us,
we continue to be focused on delivering exceptional service to our customers.”
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