Communisis increases profit, continues cost reduction
By Simon Nias Tuesday, 26 July 2011
Communisis has increased its profit by almost 50% year-on-year in the first half of 2011 as it continues to transform its business through capital investment, new contract wins and ongoing cost reduction measures.
In its interim results for the six months to 30 June 2011, pre-tax profit increased from £1.8m to £2.9m, while operating profit before exceptional items rose 27% from £2.8m to £3.6m.
However, while group margins were up turnover dropped slightly from £98.1m to £97.8m, resulting in a drop in profitability for the IDC division, which Communisis expects to improve in the second half.
Also in the results the company said that it would be consolidating its facilities from the existing 14 down to nine, in a move that will lead to annual savings of £2m.
Closure of the production plant at Leicester was announced in November 2010; however offices at Eastcote, Richmond and Rickmansworth plus the head office building in Leeds will also be closed.
As well as the closures, 80-90 jobs will be lost, 35 of these will be at the recently acquired Orchestra print site in Bristol and 46 will be due to older capacity coming out at Leeds, equating to around 9% of the total staff at the site.
According to chief executive Andy Blundell, half of the annual savings will be reinvested in new skills.
He said: "The service that we need to deliver out of our direct mail business is changing and we're therefore simultaneously investing in one part and reducing our capacity base in another – what I call 'old world capacity'.
"In terms of Leeds, we are the number one player in direct mail and we intend to remain that. What we are doing is shifting our emphasis to progressively put more emphasis on complexity and colour digital and less emphasis on 'old world' direct mail. We're investing to remain number one in that market."
The results also drew attention to a number of contract wins during the period, including the £4.5m per annum BBC TV licensing contract, which moved across when Communisis acquired Orchestra Bristol and a £10m a year marketing services contract with Procter & Gamble.
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