BENHAM GOODHEAD PRESS WILL BE IN PROFIT for final quarter of the year group chief executive David Holland told a gathering of BGP stakeholders at an update meeting last week.
The clear message was that the massive £60 million investment at Bicester has put the company in a very strong position as consolidation and the restructuring of the UK web offset sector continues. “Our competitors are reducing capacity and are not investing; there are shift reductions, retirements of 32pp presses,” said Holland. “We have no legacy issues and do not face costs of reconstruction that they do. Consolidation is very, very expensive.”
NEEDLESS TO SAY, BGP WILL NOT BE PARTICIPATING IN the consolidation process, Holland stressing that BGP is not for sale. “The idea that we would sell up to any other party is nonsense,” he declared. Nor said Holland does its strategy depend on waiting for rising prices in order to be profitable. “We are profitable when the factory is full,” he explained. And with the run in to Christmas, the factory is running at capacity.
However, it remains work in progress. BGP is continuing to replace low value work with better quality business, typified by its resigning contracts from Future Publishing which Holland told his audience of equipment and consumables suppliers. “The price was uncompetitive for the effort involved,” he said.
OTHER CONTRACTS HAD BEEN TAKEN ON and have strengthened the product mix. It has won the offset work from Northern & Shell which had been at Polestar, picked up Which? magazine, Time Out and insert work for Prinovis, contracts after DC Thomson closed its gravure plant and in the new year will be printing a new title for Hearst.
The mix has taken BGP to 26 weeklies and 130 monthlies with contract work accounting for 72% of capacity. “We want to get to 80% contractual next year,” Holland added. This will cover the continuing weakness of the commercial sector. An upward movement in run lengths (to around 140,000, from 70,000 five years ago) points to a strengthening of the customer base.
THE COMPANY CONTINUES TO WORK AT EFFICIENCY improvements with the aim of achieving World Class Manufacturing standards. A second Ferag system being installed in the coming weeks will continue the improvements in bindery efficiency. The first Ferag is running at 87% capacity.
Earlier this year the company acted to trim the cost base, decommissioning older press capacity and reducing the use of casuals. Overall headcount has remained at 575. The year had started poorly with the business over committed on work and suffering badly from the snow over a six week period. This had set the plan back a year Holland explained.
THE IMPACT OF THESE MEASURES WILL BE a £4 million reduction in costs, helped also by the reassignment of the lease of the Colchester factory saving £1 million a year starting from April next year and as the business begins to show a profit, gaining from interest payment reductions.
The company benefitted this year when its chief shareholder waived his right to interest payments on the £36 million of loans made. “But there is no anticipated need for shareholder support going forward,” Holland said. “We are in a much happier place.”
