Printing.com issues profit warning but maintains dividend

Simon Nias
Wednesday, February 20, 2013

Printing.com has issued a profit warning ahead of its full year results for the year ending 31 March 2013.

The Manchester-based print franchise said that it would likely be "materially behind market expectations in the current year" leading analyst N+1 Singer to cut its pre-tax profit forecast from £1.6m to £1.2m.

Given the wording of Printing.com's trading statement, the full year result may yet come in below this revised £1.2m estimate, which would represent only a small dip on last year's £1.26m pre-tax profit.

Printing.com said that the likely shortfall was due to softer than anticipated trading across the group's European channels in the second half of the year coupled with increased marketing expenditure on its new software initiatives W3P and Templatecloud.com.

Printing.com chief executive Rafferty said that, while the transition from print franchise to web-to-print software developer was "taking longer than we'd like", the board was confident in the strategy and in the prospects for the business.

"At this point there is a lot of renaissance talk about print franchises but we believe the model now is not just about licensing a name, it's about giving people the tools to do what they want to do online and help them to put more jobs on their own presses."

Unsurprisingly, the firm's share price fell on the profit warning and was down around 11% at 27.6p at the time of writing; however, in a bid to calm investors, Printing.com committed to maintaining its final dividend at the same time as issuing its profit warning.

Rafferty said that the decision to maintain the dividend was an expression of the board's confidence in the firm's prospects and a reflection of its cash generation, strong balance sheet and lack of debt.

"We're confident and that's backed by us intending to keep dividend at that level," he added. "This time last year we had nothing new to sell, whereas now we have a lot of interesting new products in the marketplace.

"Our share price might have hit a low point but our innovation graph - if there were such a thing - in terms of new products coming into the marketplace has never been higher."

Rafferty said that he still believed the firm would have 100+ Templatecloud customers worldwide in the next 2-3 years, while its next generation web-to-print software W3P is expected to grow at an even faster pace.

"The first W3P licences have been granted in the UK and I think we'll add 25 in the current quarter and continue to add around 25 per quarter over the next couple of years," he said.

"We know a lot of digital printers that are looking to move parts of their business online because they're seeing their average order value go lower and lower and their admin cost is the same whether the order is 100 copies or 50 or 20.

"They're telling us they need to do more of that order processing online and that's what W3P allows them to do."


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