News
St Ives profits double as sales slide
First-half profits have almost doubled at St Ives, according to figures released this morning (9 March).
Underlying pre-tax profit rose £2.2m year-on-year to £8.4m for the six months to 29 January 2010, which resulted in pre-tax profit from continuing operations soaring 89% to £8.3m from £4.4m.
However, the increase in half-year profits at the UK's largest print group was tempered by a sales drop of £21m, from £208m during the same period last year to £187m.
St Ives chief executive Patrick Martell credited the profit boost to an "improved work mix" and the impact of a series of cost-cutting measures undertaken by the group last year, which included the closure of its Andover and Crayford site, resulting in substantial job cuts.
However, Martell warned that the results were not an indication of a general upturn in the market: "We are not anticipating any immediate improvement in our underlying markets; we will continue our focus on cross-selling.
"This will, we believe, allow us to make progress during these difficult times and to take advantage of better market conditions in due course."
According to the results, the group also slashed its net debt from £19m at the end of its previous financial year to just £5.4m.
The group's Commercial Products division, which includes direct mail, point-of-sale and exhibitions, recorded the largest fall in sales from £124m in the first six months of last year to £111m, but profit rose from a marginal loss last year to £1.5m profit.
According to the group, book sales increased "modestly", while magazines continued to suffer from excess capacity resulting in the segmented results for Media Products dipping by £4.7m to £79.2m, with profits falling to £7.8m from £8.2m.
The effect of the loss of the IPC contract will not impact on the group's 2009/2010 results, the company said.
On the back of the results, St Ives' share price had risen by 1.5p to 51p at the time of writing.
Martell: 'Improved work mix'
Comments
The comments below do not necessarily reflect the views or opinions of printweek.com, Haymarket Media Group or its employees
Josh Tree - 09 March 2010
I never thought I'd say this but hats off to St Ives, more of us should take a leaf out their book on this one. It appears they've taken a good look at the mix of work, bombed out the loss making crap, and opted to move the company in a direction where they can add value \(and make margin) rather than just filling machines with loss making work and being busy idiots.
What a fantastic impact it would have on our industry if more companies did the same:
Sick of clients having your pants down on price? Sick of Print Managers treating you as a quoting machine? Sick of flogging your guts out to get to the end of a busy month and realise you still haven't made a profit? Sick of being shown no loyalty?
Here's the answer:
- Stop chasing turnover for the sake of it, if half your mix of work is loss making, it needs to go, along with the capacity you're using to run it. Harsh but true.
- Stop working with clients that do nothing for your business. If you're doing 20 quotes to convert 1 job that is painfully low margin, and out of every 5 jobs your being 'beat up' for a credit note, GET RID OF THE OFFENDING CLIENTS. Until you do the pain will continue.
- The time, money, energy, and improved self esteem your entire business experiences by adopting the above strategy can then be channelled into properly cultivating REAL clients who appreciate the meaning of good service and good value.
Only then you can start growing a proper business.
Maybe I'm just a dreamer but I'm already seeing signs of companies adopting this more sensible strategy, this story is a good example.
'Not A Doctor' (NDCT) - 09 March 2010
Josh - well said, mate. Do us a favour and repeat that post on every thread, please.
Doug Richardson - 09 March 2010
Great News well done St Ives.
Great Posting Josh Tree.
It's a pity you could not grace your comments with your God given name.
regards
Doug
Josh Tree - 09 March 2010
Oh come on Doug don't start this again, I had this debate with you under my last name, but that doesn't narrow it down much for you as so did everyone else.
I wanted to start a clean slate as Josh, please lets not argue this time?
Thank you for your kind comments on my post nevertheless, the topic of which I feel great passion about
mike allan - 09 March 2010
The old maxim remains true to-day,turnover is vanity,profit is sanity.
Justa Print Buyer (C. Kent) - 09 March 2010
You beat me to it Josh.
Doug, this is not the time to repeat your tiresome hobbyhorse.
let it lie...
GARY BYRNE - 09 March 2010
Brilliant post Josh, not bothered who you are its great to read such good and so true comments
WELL DONE and hats off to Pat in his first half year numbers, Sesible strategy, sanity not vanity how good does this all sound, time for every one else to have some balls and follow suit
Cheggers Doppelganger - 09 March 2010
Josh, very wise words indeed, my only problem with those words is near the end where you say "good service" . Where most printers fall down these days is by constantly banging on about "Customer Service" but yet provide an absolutely useless "Customer Service" to their clients. It's OK giving an excellent service until you get the orders in but then let clients down with a poor service at the back end. Having been a Print Buyer for 30 years I could write a book on how many times I've been let down over the years with poor customer service from printers the length and breadth of the country.
Rant over
Cheggers Doppelganger - 09 March 2010
where's Oeurin Dawes ?? loved your comments earlier in week on previous St Ives blog. Agreed with lots of it, let's have more !!!
Chris Lewis - 09 March 2010
This is absolutely brilliant news. It is great to see a company sticking to its guns in terms of costs, and seeing an increase in profits. However, I fear that it takes a company with the resources and funds of St Ives to be this brave. In the current climate, most companies are waiting for an increase in sales before they are able to apply a startegy that will see an increase in margins. It is a finely balanced game plan, but it can be done with real attention to detail. Unfortunately, too many print companies still rely on pure passion for print, and this isn't good enough any more. Hopefully, more print companies are waking-up to the reality of having to provide a full range of services, including the dreaded print management services. Once you have a full range of services you can hope to increase margins, even if it means a decrease in turnover
'Not A Doctor' (NDCT) - 10 March 2010
Chris - I can't square the post above with your post on the Scottish Government tender thread.
You're theory is also completely at odds with the philosophy of Webmart, who want every printer to become a narrow super-efficient specialist in just one area so they can bring their prices right down.
Josh Tree - 10 March 2010
''However, I fear that it takes a company with the resources and funds of St Ives to be this brave. In the current climate, most companies are waiting for an increase in sales before they are able to apply a strategy that will see an increase in margins.''
Chris, I totally agree. This is exactly what companies are doing and unfortunately here lies the problem. We are all 'waiting' for margins to go up as if this is something that will happen by magic!
The only way margins will improve for us all, is when we stop quoting or producing work at a loss, and let go of the illusion that continuing to do this will serve any purpose.
It's not just margins either, it's everything else too - We're all at the mercy of our clients demands and it's time to wake up, start taking control, and start running your business with a bit of common sense. Here's a few pointers:
- You can't run a business at loss making margins
- You can't run a business on 90-120 day credit terms
- You can't offer flexibility and 'good service' when you machines are 100% full of crap work from crap clients in a futile attempt to recover overhead.
- You can't run a business where you have twice as much capacity as you have work to fill it.
- You can't run a business where you do all of the above, and then go give your clients a nice big rebate at the end of the year to thank them for screwing you! Alarm bells ringing yet???
AND FINALLY, IF YOU HAVEN'T YET REALISED THE ABOVE WITHOUT ME SPELLING IT OUT THEN YOU DON'T DESERVE TO BE RUNNING ONE!
Am I just a hopeless idealist, or is it time we all started taking control and actually doing something rather than blaming others for things that we actually control?
Jon Fennell - 10 March 2010
Josh, I agree with the principle of offloading bad payers and also low margin business. It means a lot have to be brave and could mean more redundancy and a reduction in available shift hours, that is of course if the business can afford to do that, but maybe thats what is needed for now.
If sales were available to fill the holes created by dropping of low margin business all would be fine. Sadly it isn't. Sales is the key, unless capacity is taken out and business is streamlined to accommodate reduced work levels. There is no point in being open 24/7 if you can only fill 16/5, cash is haemorraging the business and capacity soaking away margins.
Clients still think they can drive down margins because of the ''soft market'', they havn't quite caught on that many businesses are already unsustainable and prices are rock bottom. Capacity remains the big problem.
Justa Print Buyer (C. Kent) - 10 March 2010
Jon, you're right to say that clients haven't yet caught on that prices are at rock bottom. I think it's a perception that will always be there when quotes come in with such a big range between lowest & highest. Assuming that the quotes have all gone to suitable suppliers it suggests that there is a fair margin for [at least some] printers. If the quotes were more or less on a par, the perception might be that they are all down to that price rather than up to it.
Jon Fennell - 10 March 2010
Justa have ntoiced it as well. You get 1 or 2 perhaps 20% lower than the main pack, you have to question why or how long they have left.
Chris Lewis - 10 March 2010
NDCT - I'm not sure I was aiming to make my quote against this news story square against the Scottish Government one. Both St Ives and APS have their marketplace, and both are perfectly reputable companies. I know that sometimes on these forums the answer has to be black and white, it is either good or bad (mostly PM is bad), but in reality nothing is ever that simple. For some customers PM is the answer, and hence if printers want to get a slice of this, they will have to increase their offering. When I started in print hardly anyone had a design studio, yet a great number of the print industry do now as they need to diversify into this area in order to survive. Hence, I would have thought that as PM is deemed to be so easy by so many printers, then it would be the obvious area of expansion/diversification
I'm not sure why you are quoting Webmart at me. They have their business model, and I am sure that it works fine for them, but I have no connection with them. The future is grey, not yellow
Joseph Carlow - 10 March 2010
An excellent set of results in terms of cash management and improvement in pre tax profitability.
However, the book division is holding up the whole group. The web side is making an operating loss and the commercial products' EBIT margin is 1%.
Despite this, St. Ives is in a great position to exploit the opportunities that will, no doubt, present themselves in the next year or two. It must now have £60 million plus of unused bank facilities. I wonder what it could spend that on?
JC
The Voice of Reason - 11 March 2010
Meanwhile over at Reading
Next Return Due: 05/12/2010
I expect the auditors want to put a "going concern" note in and the bunfight is ongoing.
St Ives figures are even more remarkable when measured against that shambolic outfit.
catherine rigg - 11 March 2010
Voice - even with all those superstar sales directors in it!
Print Consultant - 12 March 2010
Josh, Great post!
Very insightful indeed & I share your optimism over companies adopting a harder strategy.
Regards PC
Simon Biltcliffe- Webmart - 12 March 2010
Friday afternoon thought:
We know customers generally want to deal with a printer who can offer them a wide range of products at a good value & with a good knowledge of how they like to work. What St Ives has done is demonstrate this & when the "good value" the client demands is not a sustainable value for them they have moved away from producing it and looked for better value elsewhere.
It is a sensible strategy.
Where I would say there is an alternative to "not supplying" is to build on the relationship you have with clients and offer a narrower range of print manufactured by yourself \( just your core, profitable offering) whilst offering them a wider range of services by outsourcing the rest to people who can manufacture more efficiently and deliver it to you at a lower price for you to mark up & sell to your customer.
The outsourced printer wins, you win and your client wins.
Easier said than done perhaps, but the theory is sound & to help we have developed a load of free tools to allow printers to do this on www.FreePrintSales.com
-currently 27% of printers on our site ONLY use it get estimates to buy print from & not sell print though! It is growing every month as more realise they can become a print manager themselves and make as much money through doing that as they can by printing themselves.
Print less & sell more seems to be one way of ensuring you keep customers and keep in business. More on my blog over the next couple of days if you're interested.
Have a smashing weekend y'all!
www.webmartUK.com/simonbiltcliffe
Edna Bag - 12 March 2010
Nice pitch Simon, we should all do that tomorrow (alright monday), one snag, if we all started to use your wonderful and almost free service, who would manufacture? and what happens when so many printers have dumped there machines capacity disappears and the price go up. You have to admit web is getting near that point and it won't take much to tip it. BGP ain't released accounts yet, they are possibly the fly in the ointment.
Simon nice try, you have such a caring way.
William Joyce - 12 March 2010
'Print less & sell more' is a mathematical impossibility for all unless S B-W has rewritten the laws of arithmetic
Stanley Dingtype - 12 March 2010
Nice advert Simon, placed in the
almostcertain knowledge that the site manager disappears at 5.30pm on a Friday, so you get a whole weekend free! Good show!Simon Biltcliffe- Webmart - 12 March 2010
EB- the price goes up if there are fewer suppliers- problem being? the printers make more money.
WJ- you are buying in the difference between your higher sales and your self printed supply.
Simon Biltcliffe- Webmart - 12 March 2010
nope- just got a chance to say well done St Ives.
Sure Matt will still be at work as he's a grafter like the rest of us in print. How about "don't us our service if you are a printer wanting to get a price" for the sake of balance go to printing.com, speedquote, Communisis IQ. I wouldn't want you to be a sad little ducker on a Friday evening.
:-)
The Voice of Reason - 12 March 2010
[quote user="Simon Biltcliffe- Webmart"]
Friday afternoon thought: We know customers generally want to deal with a printer who can offer them a wide range of products at a good value & with a good knowledge of how they like to work. What St Ives has done is demonstrate this & when the "good value" the client demands is not a sustainable value for them they have moved away from producing it and looked for better value elsewhere. It is a sensible strategy. Where I would say there is an alternative to "not supplying" is to build on the relationship you have with clients and offer a narrower range of print manufactured by yourself \( just your core, profitable offering) whilst offering them a wider range of services by outsourcing the rest to people who can manufacture more efficiently and deliver it to you at a lower price for you to mark up & sell to your customer. The outsourced printer wins, you win and your client wins. Easier said than done perhaps, but the theory is sound & to help we have developed a load of free tools to allow printers to do this on www.FreePrintSales.com -currently 27% of printers on our site ONLY use it get estimates to buy print from & not sell print though! It is growing every month as more realise they can become a print manager themselves and make as much money through doing that as they can by printing themselves. Print less & sell more seems to be one way of ensuring you keep customers and keep in business. More on my blog over the next couple of days if you're interested. Have a smashing weekend y'all! www.webmartUK.com/simonbiltcliffe
[/quote]
Why should anyone use your opaque and arbitrary broking system? Go on mate put all your machine rates into my computer, I promise not to tell anyone. Are you haveing a larf?
The Voice of Reason - 12 March 2010
Wind
Have you read this piece?
http://www.printweek.com/news/989960/White-Horse-Machinery-turns-fortunes-around-restructure/
Simon Biltcliffe- Webmart - 12 March 2010
you don't have to do owt like put cost rates in to get a quote- just a specification TVoR- chill.
Chris Lewis - 12 March 2010
Put these words in the right order:
"Such no lunch thing free as a"
and
"Good too be true to"
While I can admire the business prowess of some print managers, the smoke & mirrors approach of proclaiming that they are saving the world of print and the end customer is perhaps a little disingenuous. I'd rather be frank that I am here to make money, and I think that we can all make money at the same time
Stanley Dingtype - 12 March 2010
I wouldn't want you to be a sad little ducker on a Friday evening. :-)
I trust you meant 'drucker' and not the other non-German expletive alternative Simon. As it happens I'm not a sad little anything, just a happy-go-lucky duck, and don't you worry about my weekend, I won't worry about yours.
The Mighty Wind - 12 March 2010
[quote user="William Joyce"]'Print less & sell more' is a mathematical impossibility for all unless S B-W has rewritten the laws of arithmetic[/quote]
Which shell do you think the pea is under?.................chase chase chase the ace.
"He is not the messiah.........he is a very naughty boy"
Stanley Dingtype - 12 March 2010
Chris - I too admire the business prowess of some print managers, but not brokers, there is a less than subtle difference which some do their utmost to disguise. Only ingenious bit is the free advertising, and if it is allowed, I say we should all do it.
The Mighty Wind - 12 March 2010
[quote user="The Voice of Reason"]
Wind
Have you read this piece?
http://www.printweek.com/news/989960/White-Horse-Machinery-turns-fortunes-around-restructure/
[/quote]
yes.........I thought tommy cooper was dead until I read this, and then reading this.....The debt has now been paid off in full and a new finance agreement has been agreed with Bank Leumi...........I wondered if he was having cocktails with R Maxwell
Simon Biltcliffe- Webmart - 12 March 2010
Chris- just for you: I am here to make money, and I think that we can all make money at the same time by working together.
Evening all!
http://www.igs.net/~gmcgaw/dixon_of_dock_green.jpg
The Mighty Wind - 12 March 2010
Definitely not the messiah...........as he could feed 5 thousands printers with a morsel of bread and kipper.............er wait a minute.......OMG he must be the messiah, but he is still a very naughty boy.
See my Bog for further details
William Joyce - 12 March 2010
I understand that S B-W but the point is that it is mathematically impossible for everyone to follow the route you propose. Printers are a service industry, they print to order. The total volume printed by the industry must equal the total volume sold. If printer X decides to get out of a speciality because printer Y is able to do it better/cheaper, and printer X then makes money on selling on product from printer Y to his customer base, Then printer X has indeed printed less and sold more (or at worst the same). But printer Y has printed more and sold more. If printer Y follows X's example and gets out of some other speciality in which it is not expert by offloading its work to printer Z then printer Y may no longer be printing more but printer Z is. In the end, if all printers were to adopt your precept, it cannot work; for every piece of non-core business that you offload, you have to take on a piece of core business from someone else for whom it is peripheral. Because it's core business that you're set up to handle you make a better margin. So the model is actually, 'Print the same & make more'
Stanley Dingtype - 12 March 2010
William, you missed out 'Broker W' that's the magic bit, silly!
Chris Lavers - 12 March 2010
Hi Simon, hope you are well. You in for the night? I warn you, it does get a bit crazy on here!
How are the bikes going? Each time I read you it reminds me to get my Yammy back on the road. This is the year. Wanna see a picture?
Check out those zausts. Four into one does go!
'Not A Doctor' (NDCT) - 12 March 2010
WJ - I think everyone is missing the point here - it's pure bull this argument of Biltcliffes and I cannot believe so many desperate producers out there are falling for it.
A factory with a given set of overheads (direct and indirect costs, excluding materials) needs to take in enough work to cover all those overheads BEFORE any profit is made, irrespective of whether the mix of actual jobs has high or low 'added value' or contributions. Just because someone can manufacture it a bit cheaper than you is irrelevant. If you give it to others to do and you then have a load of non-productive time, you will not possibly make up the lost 'added value' from the resale margin that you would have made by producing it yourself. You could have the best margins 'per job' in the world, but if you can only fill your capacity for 40% of the time and breakeven requires 60%, then you have a loss-making business.
As WJ says, it only works if the equation is balanced on all sides, but this cannot possibly work out equitably. So the only way around that is to sell the inefficient machinery, sack some staff and downsize the factory so you are just running one super-efficient machine 24/7/365. The problem with that, tempting and easy as it sounds, is what happens when demand for the product made by that machine slackens off. You have no alternative machinery or production, unable to adapt to work that IS in the market, and its curtains for the business.
Stanley Dingtype - 12 March 2010
Agree with that (been here sometime before I think, or is it just deja-vu) - but in any case, a third party (broker) taking out another 'percentage' whilst adding zero value cannot possibly improve the overall situation.
In case anyone was misguided enough to be convinced by the spiel - the 'tools' might be 'free' but using them carries a price. As I said, the only really free part was the advert!
William Joyce - 12 March 2010
So that would turn it into 'Sell the same, make less' would it Stanley?
'Not A Doctor' (NDCT) - 12 March 2010
William - the correct term for this model of business is 'death spiral'.
(It's also what Gordon Brown has done to the UK economy in that his borrowing is so high that very soon he won't even be able to raise enough in tax to pay the INTEREST on the debt. Every bankrupt gets into that situation shortly before they go down.)
Stanley Dingtype - 12 March 2010
Do you know William, I think that might be what I am saying - the 'Broker W' bit of your equation.
Christ I've got a headache now! Did you know that Albert Einstein's most famous, and probably only useful invention was the refrigerator? Keep it simple, that's my motto.
The Voice of Reason - 12 March 2010
[quote user="Simon Biltcliffe- Web mart"]
you don't have to do wot like put cost rates in to get a quote- just a specification TVoR- chill.
[/quote]
You are merely a broker of free production time, when that time is no longer available you will be somewhat embarrassed. Not long now.
Justa Print Buyer (C. Kent) - 12 March 2010
[quote user="'Not A Doctor' (NDCT)"]
As WJ says, it only works if the equation is balanced on all sides, but this cannot possibly work out equitably. So the only way around that is to sell the inefficient machinery, sack some staff and downsize the factory so you are just running one super-efficient machine 24/7/365. The problem with that, tempting and easy as it sounds, is what happens when demand for the product made by that machine slackens off. You have no alternative machinery or production, unable to adapt to work that IS in the market, and its curtains for the business.[/quote]
Very succinctly put NDCT. And of course if you guys all concentrate on one profitable niche, where the bloody 'ell am I going to get my jobs that fall into the 'bread & butter, but not very profitable' category??
It must be obvious, even to SB, that printers will not survive indefinitely on one niche offering. Who's going to volunteer to be the one that does the 6 colour Hexichrome process? [or whatever it was called].
Edna Bag - 12 March 2010
[quote user="Simon Biltcliffe- Webmart"]
EB- the price goes up if there are fewer suppliers- problem being? the printers make more money. WJ- you are buying in the difference between your higher sales and your self printed supply.
[/quote]. No problem with them making more they put in the investment, but what makes you think you'll be included in that mix, its entirely possible web capacity will match demand, perhaps you should be offering to buy into BGP.
The Mighty Wind - 12 March 2010
[quote user="The Voice of Reason"]You are merely a broker of free production time, when that time is no longer available you will be somewhat embarrassed. Not long now.[/quote]
Essentially the nutshell there VOR..................He had a "window" made his money but time is moving on and the window is compressing.
Edna Bag - 15 March 2010
Makes for a more positive read re magazines.
http://online.wsj.com/article/SB10001424052748703940704575090120113003314.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsThird
Stanley Dingtype - 15 March 2010
[quote user="Edna Bag"]
Makes for a more positive read re magazines.
http://online.wsj.com/article/SB10001424052748703940704575090120113003314.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsThird
[/quote]
I does Edna, it will be interesting to see whether anyone this side of the pond can be bothered to do similar here though.
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