The latest edition of the BPIF Printing Outlook report, which suveyed a total of 96 companies between 1-18 July, highlighted concerns about the impact competition for new business is having on print prices.
Competitors pricing below cost was the main business concern, with 76% of respondents citing it in their top three, followed by concern over the level of output prices (30%) and under-utilisation of capital equipment (29%).
Selling prices in the second quarter "continued to be under significant pressure" with almost a third of printers (32%) reporting that they were forced to reduce prices versus just 2% that were able to increase them.
And, despite upbeat predictions for demand in Q3, with increases in output and orders forecast by 39% and 45% of respondents respectively, only 4% believe that they will be able to raise output prices, while 38% predict that they will be forced to cut prices in order to compete effectively.
Kathy Woodward, BPIF chief executive, said: "The major concern continues to be competitors under pricing. We are now seeing more robust business performance from those companies refusing to join in downward pricing spirals enabling them to invest and grow their market positions. It is hoped that more companies will follow suit."
For the three months to the end of June 2014, 37% of printers reported an increase in output versus 18% who experienced a drop, giving a balance of +19, which while positive was some way below the Q2 forecast of +48 given in the previous survey.
"Despite the very positive predictions from the previous quarter not fully translating into this quarters results the figures for the quarter continue to reflect positive growth for the sector," said Woodward.
Input costs were reasonably stable, with rises in energy and labour costs offset by drops in paper and ink costs, while 88% of respondents reported that their businesses were either expanding (50%) or stabilising (38%) versus 10% who said they were surviving and just 2% who reported a contraction.
Margins continue to be under pressure with 36% reporting a squeeze versus 12% showing some improvement, giving a negative balance (-24) for the 14th consecutive quarter.
Nevertheless, business confidence remains high, with a balance of +29 reporting that market activity rose in Q2 (beating the +23 forecast) and +20 expecting an uptick in activity in Q3.
This confidence is reflected in printers' investment plans, with 95% of respondents currently investing in plant and machinery and 48% reporting an increase in investments over the past 12 months.