Grafenia makes progress with transformation plan
Thursday, November 28, 2019
Interim sales at Grafenia have nudged up to £8.41m and the business broke even at the EBITDA level, with the firm hoping for a further improvement in the second half despite “difficult and uncertain times” for its customers.
Sales in the six months to 30 September were up 1.2% at £8.41m, while EBITDA improved from a £0.44m loss last year to a £2k positive.
Operating losses reduced from £1.36m to £1.01m.
The Manchester-headquartered print, online, and signage business said it had completed “significant heavy lifting” in the first half with the installation of a new Komori press at its production hub and the consolidation of print operations at that site.
The new press resulted operational savings and overheads reduced by £440k to £4.32m, with further savings to flow through in the second half due to the relocation of Image Group’s production facilities into the same site.
Chief executive Peter Gunning commented: “We’ve made some progress on our transformation plan and thank our teams for all their efforts. Our Nettl Company Stores have grown, as has our Nettl network. We’ve continued to add new partners in each country we operate.
“We’ve invested in future cost savings in the first half, by combining two factories into one, and blending two teams into one. But we won’t see those benefits until the second half and beyond.”
The firm is “relentlessly automating things done manually, or stupidly”.
In the interim report, Gunning and chairman Jan Mohr commented: “It’s far from an easy time to be in business. We sell B2B and it’s difficult to think of a more uncertain time for our clients, particularly how the current political environment is messing with their day-to-day decision-making.”
The market for trade printing wing Marqetspace continues to be highly competitive, with overcapacity resulting in "heavy discounting". Sales of trade print and print for brand partners slipped from £2.08m to £1.9m, with the number of Printing.com subscribers falling from 100 to 77.
"It's getting tougher for businesses to survive by selling print alone and we continue to encourage partners to follow the trail others have done, to diversify and upgrade to Nettl," Grafenia said.
Nettl locations worldwide grew to 235, including 10 in America, where Grafenia has made a substantial investment in setting up a new Nettl franchise operation.
The group remains on the lookout for suitable acquisitions and has met “lots of potential acquisition candidates… but we’re not rushing to do deals”. It is prioritising larger signage businesses.
It remained cautious on the outlook due to the political and economic climate.
“Our goal for the second half is EBITDA breakeven on a monthly run-rate basis and our mid-term goals remains to reach an EBITDA margin of 10-15%.” Gunning and Mohr stated.