St Ives' book printing subsidiary Clays increased its output by around half a million books in 2011/12, but while the number of orders was "up significantly", average print runs were "down significantly".
Books revenue, which accounted for 26.8% of St Ives' Print segment's £280.3m revenue, was down 2.7% year-on-year at £75m (2011: £77.1m). The number of orders processed rose 13% but average run lengths fell 11%.
"That change of mix is driving operational inefficiency because run lengths are getting shorter, which is impacting on margins," said Martell.
Part of the problem has been down to the time taken to get Clays' new Kodak/Timsons digital book printing line, which was ordered last year and installed in spring for runs of 500 to 2,000 copies, up to speed.
"It's operational but it hasn't yet met it's full production speed," said Martell. "But it's a world first - it wasn't something that we were buying off the shelf - so the start up was always going to be longer because it was a prototype and nobody's done it yet.
"A lot of the software was being written as part of the installation and there was still quite a bit of testing that needed to be done in situ - we took the decisions, together with Timsons, to do that on site [at Clays] rather than leaving it with them.
"It would have been better if we'd had it [fully operational] a year ago; it would've been better if we'd had it a month ago, but in terms of quantifying that it's only one machine out of many and at this time of year the run lengths tend to go up a bit because you've got the autumn best sellers."
While Clays' now expects to have its new digital press up to full speed by November, Martell said he was sceptical of the current need for investment in digital colour printing, which has been seen at rivals such as CPI.
"We don't believe digital colour is right for the trade market, which is what Clays principle market is, and also we don't think the quality is good enough yet for non-trade books.
"From what I've seen the quality of the output doesn't match litho and it's not as flexible – you haven't got the range of papers – litho still has the edge as far as quality and flexibility is concerned.
"Would we invest in colour? If we could see there was a market for it then yes we would but we've got no plans to do it."
Margins in book printing were down year-on-year, which Martell said was being driven by a host of factors, including what happens with ebooks and with the mix between A and B format books.
"We've seen some impact from ebooks – although not significant – we're also seeing more of a shift towards B format books becoming more seasonal, run lengths are getting shorter, average numbers of orders are going up.
"All of it is having an impact but one thing that is definitely not happening is we are not seeing the death of physical books."Tweet