Trading conditions in the general printing industry remained sluggish during the June 2012 quarter according to official data released today by the Australian Bureau of Statistics (ABS).
The reported outcomes for a range of key industry indicators comprising of new capital expenditure, sales, profits before income tax and economic growth were all in a downward direction.
Commenting on the June quarter outcomes Printing Industries National Manager for Policy and Government Affairs, Hagop Tchamkertenian said he was not surprised by the overall trend in the official figures.
"More than seven weeks ago when we released our internal research findings from the Printing Industry Trends Report we alluded to the general downward trend in industry conditions. The latest official data confirms what we said then about the challenging trading conditions encountered by the industry participants during the June 2012 quarter," he said.
The ABS economic growth data shows that the printing industry measured in trend terms, contracted by two per cent during the June quarter and registered a 13.8 per cent decline on an annual basis, the worst reported contraction on an annual basis amongst the sectors comprising the Australian economy. The June growth outcome also represents the fourth consecutive reported contraction for the printing industry.
Mr Tchamkertenian said the reported trend industry gross value added figure for the June 2012 quarter places the printing industry at its lowest point in more than 18 years.
"On an annual basis, the contraction in industry value added places the printing industry in a state of depression. This is occurring at a time when the growth data also shows that the Australian economy grew by a robust 3.8 per cent on trend basis.
"Household and government expenditure along with investments in non-dwelling construction made positive contributions to Australian economic growth during the June quarter, but net exports (exports less imports) detracted from growth," he said.
At an industry level today's National Accounts show that the main contributors to growth during the June quarter comprised transport, postal and warehousing; financial and insurance services; wholesale and retail trade; professional, scientific and technical services; and health care and social assistance. Manufacturing detracted from growth during the quarter.
On trend basis, economic growth continued to vary between the states and territories with robust economic growth being reported by the Northern Territory; Western Australia and the Australian Capital Territory; solid growth reported by Queensland and South Australia; moderate growth reported by New South Wales and Victoria; while the Tasmanian economy contracted.
Other key data released in recent days by the ABS data shows that new investments declined by 10.9 per cent during the June quarter compared to the preceding quarter. This was the third consecutive quarter fall in new investments. Compared to the same period a year earlier the downward was in the order of 24.6 per cent.
Mr Tchamkertenian said for the year to June 2012 there were some $243 million worth of new investments, which represented an improvement of 14.1 per cent over the year to June 2011 outcome of $213 million. He also added that currently there are some $181 million worth of new investments being planned by industry participants over the next 12 months.
The official data also shows industry sales declined by 1.9 per cent during the June quarter compared to the March quarter, and were down by almost 12 per cent when compared to the same period a year earlier.
"According to the ABS data industry sales totaled $7,646 million during the year to June 2012 representing deterioration of 7.3 per cent against the reported total of $8,246 million for the year to June 2011.
"Over the past 12 months the data is showing that industry sales have declined by $600 million. The reduction in sales means the industry has lost the capacity to support 2,950 full time positions during that time," Mr Tchamkertenian said.
He said that industry sales had now fallen for four consecutive quarters and the June outcome was the lowest reported sales outcome since December quarter 1998.
Industry margins are also being challenged with official data confirming a sharp fall in pre-tax profits during the June quarter (37.9 per cent) compared to the March quarter and 64.8 per cent when compared to the June 2011 quarter. It was the fourth consecutive quarter fall and pre-tax profits are now are at their lowest level in three years.
During the 12 months to June 2012, pre-tax profits stood at $485 million representing deterioration of 24.1 per cent on the outcome a year earlier.
Mr Tchamkertenian said the National Accounts data along with the other data released during the past week confirms beyond doubt that the printing industry is facing serious structural issues.
"At a macro level you would get the impression that the economic indicators should be supportive of activity in the printing industry. You have solid economic growth, final consumption expenditure grew in trend terms at annual rate of 3.9 per cent and compensation to employees also grew by 6.8 per cent during the year to June.
"Industry sectors that traditionally support printing industry growth such as wholesale and retail trade; finance and insurance services; rental, hiring and real estate services; professional services; education and training; health care and public administration and safety all registered growth.
"The problem with the printing industry is the fact that growth at a national level is no longer translating into increased sales for the sector. Take non-dwelling investment for example, which is driven by mining and resource projects. While this helps to boost national economic growth it produces no direct stimulus for the printing industry.
"Then you have the situation of alternative media securing a larger share of the marketing budgets of the traditional sectors that supported the printing industry.," he said.
Mr Tchamkertenian said that there were no easy solutions for printing operators in the current economic climate.
"They need to continue to invest in new product and service offerings; engage in innovation; explore opportunities to become more efficient; invest in human capital skills and development; and seek appropriate strategic alliances," he said.
Printing Industries Association of Australia
www.printnet.com.au
