Rising costs squeezing print firms
Monday, May 14, 2018
Printers must clamp an iron grip on cash flow, warns BPIF, as its latest industry survey revealed a mixed bag of results for companies across the sector.
The latest BPIF Printing Outlook survey shows 43% of printers increased output levels in the first quarter of 2018. A further 37% held output steady whilst 20% experienced a decline in output.
The report states that: "Printing continues to defy its own forecasts as both output and orders displayed positive growth, above the expectations for Q1."
However, it goes on to say: “Unfortunately the Q2 forecasts reveal that concerns remain”, because confidence in the general state of trade in the printing industry “flatlined in Q1”.
BPIF research manager Kyle Jardine said: “It's still very difficult and though the first quarter was better than expected, it remains up and down between companies and even between weeks.
“There is a lot of fluctuation within the quarterly periods. Paper price rises and other climbing costs are affecting a lot of companies.
“And though the financial health analysis suggests a relatively good proportion of companies with solid finances, there are concerns these will get squeezed by those rising costs.
“So printers need to get the mix of business and cash flow right. I can't stress enough how important it is to keep an eye on your cash flow especially when costs are rising.
“All it takes is a mishap to create problems with cash flow. It is vital printers stay on top of it by invoicing as quickly as they can, so they can manage costs.”
On a positive note, the research revealed this was the first time for seven years that Q1 output outperformed Q4.
But while it remained marginally above a negative forecast, expectations for Q2 showed that confidence had “eroded further”.
The reoprt goes on on: “It seems the industry is expecting a tough trading period in Q2, and an intensifying battle to maintain output and minimise cost pressures.
“On this occasion the Q2 period may well be characterised by supply-chain cost and delivery concerns, wage pressures coming through and new legislative costs and burdens coming into force.”
According to the study, competitors’ pricing below cost continues to be the most voiced business concern – the proportion selecting it this quarter is unchanged from last quarter; it remains at 70%.
BPIF chief executive Charles Jarrold said: “Brexit has taken a bit of a back seat this quarter as we wait to see what happens next during the negotiations.
“However, our latest Brexit barometers suggest the economic outlook confidence during negotiations has become slightly less negative whilst the post-Brexit outlook become more negative.
In the meantime there are plenty of other matters for businesses to focus on. Costs pressures are mounting and margins are being squeezed further, as it remains difficult to raise prices.
“Companies must therefore keep a close eye on job profitability, work mix, and, as ever cash flow.”