Directions survey offers some optimism for 2007 after difficult trading year

The traditional seasonal upturn in the autumn period exceeded expectations for many companies. Directions, the survey of trends in the printing industry published by the BPIF this week, acknowledges that 2006 has been a difficult trading year. However, the report does signal improved optimism as many of the companies that survived experienced better than forecast trading in the run-up to Christmas and have renewed enthusiasm for 2007.

An improvement in prices and margins is normally reported in the January survey but this year the improvement for the autumn quarter exceeded expectations. A majority of companies reported an improvement in the general state of trade (the positive balance of 60 per cent was exactly what printers forecast) and the positive balances recorded for the movement of selling prices and margins were greater than forecast.

The optimism extends to the coming quarter (December-February). Whilst activity will be less than the autumn quarter the majority of respondents expect it to be better than the same period last year. Furthermore, a small positive balance of respondents expects prices and margins to increase further.

Unfortunately not all of the improvements can be attributed to an upturn in trade; rationalization is having an impact. The downside of this rationalization has seen hundreds of companies going out of business and thousands of employees leaving the industry. More companies in the survey expect to reduce the number of employees rather than increasing them in the coming quarter.

Kyle Jardine, BPIF information services manager, noted: ‘it is very welcome news to report the highest positive balance for prices and margins since January 1996; however, as the intervening years have been characterized by declining margins there is some way to go if prices and margins are to return to the levels experienced in the mid-90s.’

BPIF corporate affairs director Andrew Brown commented: ‘it is great to see positive signs for an improvement in the performance of the industry, though it is uncomfortable when this comes at the expense of a number of companies and employees leaving the industry.  Unfortunately there is likely to be more pain for some whilst trading improves for others; we expect 2007 to be another tough year.’