The release of the latest issue of the Printing Industry Trends Survey Report shows that trading conditions in the printing and associated industries remained subdued during the September 2012 quarter.
The nature of the reported decline was broadly consistent with reported outcomes a year earlier, which suggest that the same influences that were dragging down demand then continued to have an impact during the most recent quarter.
Encouragingly despite the difficult trading conditions business sentiment bounced back strongly from the preceding quarter and is showing signs of climbing back to more normal levels.
Mr Hagop Tchamkertenian, Printing Industries National Manager for Policy and Government Affairs, stated that the September 2012 quarter outcomes represent the 19th consecutive quarter where reported industry outcomes came in below expected outcomes for a host of economic indicators.
Pivotal September 2012 quarter developments reported by the survey respondents include:
- Reduced orders and production;
- Reduced sales and net profits;
- Reduced employment and overtime levels;
- Reduced investments in buildings but increased investments in plant and machinery during the
- past six months;
- Finance reported harder to obtain for the 19th consecutive quarter;
- Labour availability reported to have deteriorated for the 11th consecutive quarter;
- Increased material and wage costs;
- Selling prices reported to have fallen for the 47th consecutive quarter;
- Reduced levels of raw material stock levels: and
- Increased numbers of outstanding debtors.
On the pivotal indicator of capacity utilisation rates, the September quarter results shows that 53.8 per cent of respondents were operating at capacity/activity levels of 70.0 per cent or over, and outcome that is slightly lower than the 54.9 per cent proportion reported for the same period a year earlier.
Some 90.6 per cent of survey respondents ranked lack of orders as the primary barrier to increasing production levels, an outcome that is marginally higher than the 90.2 per cent proportion reported during September quarter 2011.
According to Mr Tchamkertenian over the outlook period industry respondents are forecasting net balance improvements to take place in a number of pivotal economic indicators.
Based on these forecasts the December 2012 quarter is expected to yield the following results:
- Net balance increases in orders, production, sales and net profits;
- Reduced employment but increased overtime levels;
- Reduced availability of finance;
- Increased availability of labour;
- Further modest falls in selling prices;
- Reduced stock levels;
- Further net balance increases in all production cost categories - average wages, other labour
- costs, and average material costs; and
- Increased number of outstanding debtors.
Over the next six months (December 2012 and March 2013 quarters) the survey respondents expect:
- Modest increases in plant and machinery investments; and
- Reduced investment activity in buildings.
The outlook for general business expectations over the next six months remains largely favourable with respondents from New South Wales, South Australia, Victoria and Western Australia all forecasting improvements on net balance basis, while respondents from Queensland and Tasmania are forecasting deterioration.
Respondents from South Australia reported the highest utilisation rates with 83.3 per cent of respondents operating at capacity utilisation levels of 70 per cent or more, followed by respondents from Western Australia (60.0 per cent), New South Wales (57.2 per cent), Victoria (51.7 per cent), Queensland (33.3 per cent), and Tasmania (20.0 per cent).
Most sectors are forecasting improvements or no change to take place in general business conditions during the next six months, while Business Forms and Continuous Stationery, Trade Binding and Graphic Arts Machinery and Supplies are forecasting deterioration in business conditions. Over the
outlook period the most optimistic sectors are Screen Printing and Security Printing.
Relatively higher capacity utilisation/activity levels were reported by the Digital Printing, Books, Magazines, Periodicals and Newspapers, Labels, Graphic Arts Machinery and Supplies, and Paper Merchants sectors. Considerable levels of excess capacity were reported in General Promotional and
Commercial, Trade Binding, Business Forms and Continuous Stationery, Security Printing, and Screen Printing sectors.
With a significant number of sectors reporting increased investments in plant and machinery, reported deteriorations were confined to just two sectors comprising of Other Packaging and Paper Converting and Business Forms and Continuous Stationery during the six months to September 2012.
With the exceptions of Digital Printing and Other Packaging and Paper Converting (forecasting no change), and Trade Binding, General Promotional and Commercial, and Business Forms and Continuous Stationery (forecasting deterioration), the sectors are forecasting increased investment in plant and machinery over the six months to March 2013.
In terms of general observations the deterioration in trading conditions reported during the September 2012 quarter reflected reported outcomes a year earlier. This suggests that season influences which used to be an important factor in determining and shaping industry demand have largely been absent from the industry scene for the past 18 or so months. With declining activity, concern persists about industry capacity utilisation rates which despite the welcome improvement, still remain at historically low levels.
Another area of concern is long term employment intentions which continue to record significant deterioration as businesses search for ways of reduce operating costs. The September quarter confirmed that on a net balance basis reported outcomes for both material and wage costs are trending up. This is a significant operational issue given that selling prices once again deteriorated during the quarter and expectations are for more modest deteriorations over the forecast period.
Mr Tchamkertenian said that industry forecasts for a range of key indicators remain positive but the whether the reported outcomes for the December quarter will match the forecasts is another issue.
“Over the past 5 years or so, the industry has submitted some optimistic projections which have not been fulfilled for a number of industry indicators. In recent quarters the only pivotal industry indicator that has seen reported outcomes match or better projected outcomes has been debtors. It still
continues to increase from one quarter to the next but survey participants at least have improved their ability to forecast it.
“Another interesting observation is that after a full quarter of the operation of the Carbon Tax business sentiment has not yet been impacted given that sentiment actually improved lifted strongly during the September quarter compared to the previous quarter. It is yet too early to make any definite
observations about the new tax and I believe we need at least a full year before making any firm statements about its impact on the printing and associated industries” he stated.
Survey notes: The September 2012 Printing Industry Trends Survey was distributed to 290 companies. A total of 106 companies responded to the latest survey generating a response rate of 37 per cent.
Breakdown of respondents from states are as follows: New South Wales 35; Victoria 29; Queensland 15; South Australia 12; Western Australia 10; and Tasmania 5.
Printing Industries Association of Australia.
www.printnet.com.au
