Schawk posts $4.4m first half pre-tax loss
By Simon Nias Thursday, 16 August 2012
Schawk has slipped into the red for the first six months of 2012 after being hit with a triple whammy of higher staff costs, IT and business process improvement expenses and restructuring costs.
The global packaging pre-press specialist posted a pre-tax loss of $4.4m (£2.8m) for the six months to 30 June, compared with a $10m profit last year; the loss for the quarter was $2m, versus a profit of $5.8m in Q2 2011.
First half operating and net results also fell into the red, with the former loss coming in at $2.6m and the latter at $3.1m; in 2011 the company recorded a first half operating profit of $12.6m and a net profit of $6.8m.
Schawk blamed the reversal on increases in staff costs associated with the expansion of its client service offerings, which negatively impacted gross profit margin. The operating result was said to be adversely affected by the fall in gross margin, as well as higher business and system integration expenses.
These included integration and restructuring expenses from Schawk's recent spate of acquisitions, which rose from $1.1m in the first six months of 2011 to $3.6m in the current year.
This was Schawk's highest restructuring charge since its full year 2009 accounts, when it recorded a $6.4m charge, and was only marginally less than the combined restructuring costs of the past two years, including $1.5m in 2011 and $2.3m in 2010.
Chief executive David Schawk said: "The year-over-year decline in profitability reflects certain investments we made to expand our brand development and deployment capabilities and extend our presence in emerging markets.
"However, due to persistent economic headwinds in the Americas, we took additional steps to leverage our operations and will continue to look for opportunities to improve our profitability over time."
Group turnover rose 2.6% in the second quarter to $116.3m from $113.3m; however, $8.1m or 7% of total sales came from aquisitions, without which net sales would have shrunk 4.6% or $5.2m. First half revenue was $229m (H1 2011: $220.6m).
Schawk said that the sales increase in the second quarter "reflected an increase in consumer products packaging accounts sales, offset by a decrease in promotional activity from the company's advertising and retail and entertainment accounts".
In Europe, Schawk posted a $3.5m increase in turnover to $21.2m, including $2.7m from acquisitions, but a $398,000 fall in operating income to $484,000, which the company said was "due in part to an increase in operating expenses from a recent acquisition as well as foreign exchange losses".Tweet
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