The Manchester-headquartered business has been hit by the ongoing price war among trade printers.
In the six months to 30 September sales slipped 2.6%% to £5.14m, and the group’s operating loss more than doubled, from £182,000 to £418,000.
Analysts are now predicting a full-year loss of circa £300,000.
Grafenia’s share price fell to an all-time low of 6p immediately after the announcement, but subsequently recovered to 7.4p (52-week high: 16.5p, low: 8.75p).
Although the business produced 14% more orders in the UK and Ireland, the hyper-competitive environment in trade printing resulted in print revenues falling from £4.56m to £4.34m due to lower pricing.
“It’s been a big year of change and we have tried to keep the market up-to-date during that period,” said chief executive Peter Gunning.
“We aligned our pricing through the OnePrice project, and there’s been a deep cultural change in the relationship with our brand partners. We don’t use the ‘f word’ – franchising – anymore. They are our business partners and we are doing a lot more for them than we did in the past.”
It added 20 new Printing.com partners, 300 new Marqetspace clients and the Nettl network grew to 80 locations during the period.
“Our brand partners realise it makes sense to pay us a monthly fee and take advantage of all the automated marketing we do on their behalf,” Gunning stated. “The benefits outweigh the fees.”
Income from licence fees grew by 10.4% to £793,000.
He said the firm was also having success with its ink on fabric range.
“It’s growing well and we are looking at new markets for it. It’s not just about replacing roller banners or pop-ups, you can use it to make your office a more beautiful place.”
Gunning said that despite its financial travails, the firm remained active in its search for potential acquisitions, and had the financial headroom to execute on suitable deals.
“Our major shareholders are keen for us to look for suitable acquisitions. Our strategy is to grow organically and also bolt-on some sensible things [via acquisition].
Grafenia will hold an Expoganza event in Manchester later this month, in conjunction with the BPIF, and plans to hold a further event in London next February.
