Spending hits 1bn as print re-equips

24 November 2004

More than 1bn is being ploughed into re-equipping the UK printing industry, even though the PrintWeek Top 500, published today, reveals that margins overall remain miserably low.

The astonishing spend includes a raft of massive investments by newspaper publishers, with News International accounting for the largest chunk.

More than 200m is earmarked for the two new gravure plants and major web offset printers are also ploughing money into new kit. Two firms, Eclipse Colour Print and The Journal Printing Co, have moved into web printing for the first time.

While for many companies the investment rationale centres on creating more efficient, not additional, capacity, the new high-pagination web presses being installed will also result in a net gain in output.

"If you're going to stick around in this business you need bigger machines, with faster turnarounds and quicker makereadies," said Goodhead managing director John Cooling. "With no sign of prices improving all you can do is maximise throughput on the floor."

Vision in Print chief executive Richard Gray commented: "The right investment at the right time can be a turning point for some companies, but it has to be done with care. Older presses, efficiently managed, can still be perfectly competitive."

The PrintWeek Top 500 includes figures for the 2003/2004 financial year, one of the industry's toughest periods. Average operating margins slipped from 4% to 3.29%, and pre-tax margins from 3% to 2.6%. There is some evidence that margins have picked up in 2004.

The survey was compiled with business advisers Grant Thornton. Partner Daniel Smith said: "The market is polarising between niche players and big companies looking to get economies of scale. It's the guys in the middle that are going to struggle."

Major investments made or announced this year

News International: 600m

Polestar: 120m

Arvato: 115m

Johnston Press: 60m

Guardian Newspapers: 50m

Trinity Mirror and Guardian Newspapers: 45m

New Jarrold Printing: 40m

St Ives: 20m

Express Newspapers: 20m

Precision Colour Printing: 10m

Trader Media Group: 10m