The post Covid bounceback for print continues, according to the latest results from the three major prepress companies, Kodak, Agfa and Fujifilm.
But a shadow hangs over the sector in the form of increasing costs. Kodak CFO Dave Bullwinkle pointed to the cost of aluminium and its impact on plate prices.
The aluminium price in January 2020, ahead of the pandemic, was $1,600/tonne on the London Metal Exchange. In March this year it hit more than $3,750/tonne before falling back to $2,700 or so now. The price is expected to decline slowly over the next couple of years.
Combined with increased demand and price increases, this has been enough to boost revenue at Agfa’s offset solutions division. Sales rose to €189 million (€169 million) in the first quarter of the year. Agfa continues to work on ways to set this up as a separate entity as a solid revenue generating legacy business rather than a high growth potentially high margin healthcare and medical equipment or digital print business. Its digital print and chemicals arm reports that input costs have risen and this has helped push sales to €79 million ($73 million). It notes too how demand from the sign and display print industry has now exceeded pre Covid levels and with the proposed acquisition of Inca in the offing, more can be expected.
President and CEO of Agfa-Gevaert Pascal Juéry says: “This investment will strengthen our position in the high speed wide format market as a whole and specifically in the promising packaging segment. Digital printing is a profitable growth engine for us with a tremendous potential that will be further accelerated by the addition of Inca.”
Likewise Fujifilm has experienced a 9.6% increase in sales for the graphic communications part of its graphic communications business in the financial ended in March. Sales reached ¥288.4 bn. (£1.8 bn). It projects a further 6.5% growth this year as the Covid recovery takes hold.
However, the steep increase in aluminium prices has led to announcement from the company of a double-digit increase in plate prices from the start of next month.
Taku Ueno, who is senior vice president at Fujifilm Graphic Systems EMEA, says: “Globally, we continue to see an unprecedented rises in costs, particularly for logistics, energy and raw materials. Despite absorbing a lot of these costs, we have no choice but to increase the base price of our aluminium printing plates in order to be able to operate a sustainable business.
“We understand that passing these price increases onto our customers presents them with difficult challenges, but the business is simply unsustainable without the increases.”
Along with the bounce back, there is a growing awareness of sustainability issues, helping drive up volumes of Kodak Sonora plates sold. Overall Kodak increased sales to $290 million ($265 million) for the first quarter, with volumes of Sonora plates increasing 31% compared to the same period last year. However, while revenue for traditional printing rose by $32 million to $172 million, there was a $2 million Ebitda loss compared to a $5 million surplus a year ago. Digital printing where annuity revenues from Prosper presses are growing, slower hardware sales kept a lid on the growth, resulting in quarterly revenue dropping by $8 million to $56 million and an Ebidta loss of $5 million.
Kodak, like Fujifilm and Agfa, is engaged on cost management programmes. CEO Jim Continenza says: “Kodak continued to manage through an extremely challenging business environment to deliver revenue growth for the first quarter of 2022. We are also focused on long term growth, making significant investments in print technology and the four Advanced Materials and Chemicals initiatives we announced earlier this year. Finding new ways to leverage our core strengths and delivering for our customers will be our focus as we execute our strategic plan.”
He, like his counterparts, will be watching the price of aluminium closely and pondering what will be longer term impact on the plate business. In other words, at what point do printers switch to inkjet printing rather than cope with the costs of litho printing?
