THE LOSS OF MAGAZINE CONTRACTS from Time Inc has already an impact on sales for Wyndeham Press owner Walstead, but the company is confident of replacing the work with new contracts, particularly with mail order catalogues for online retail businesses.
The impact from Time’s decision to place all its magazines with Polestar was felt only in July and August, but was enough to reduce group sales from £73.9 million to £69.6 million, a drop of 5.8%, in the first eight months of the year. It has responded through capacity reductions and extensive cost saving measures and these will continue to ensure that capacity is fully utilised. The unstated message is that should this prove impossible, there will be further capacity reductions.
THESE HAVE COME ALMOST IMMEDIATELY, the company announcing that the ET Heron site at Maldon would cease manufacturing at the end of a 45 day consultation period. Its line of older Manroland webs has been unable to attract sufficient work since the loss of the Time Inc contracts and losses at the site have worsened. A review has concluded that a return to profitability is not possible in current market conditions.
The Essex site has the oldest press profile in the group having not replaced a 64pp Lithoman lost to a fire in 2011 and relying on 32pp machines. It also lacks a cover press and while relatively close to London, the site is not ideal in terms of logistics. The announcement came just days after the upbeat comments in parent company Walstead’s financial results.
MARK SCANLON, WALSTEAD CHAIRMAN says: “The Wyndeham team has made excellent progress in continuing to align capacity with the market’s requirements and we will review this situation regularly. We have also secured new contracts in the catalogue and commercial markets including work from online retailers where print is becoming more-and-more accepted as a cornerstone of their multi-channel marketing programmes. We are confident of achieving another good result this year.”
It has already closed Wyndeham Print Direct, which has generated sales around £6 million a year but which had been generating losses. The business closed last week. The company had tried to buy the former St Ives Direct operation, but unable to reach a satisfactory agreement, has instead bought the company’s crucial short grain Lithoman III 32pp web. Once installed at the Peterborough site and commissioned by the end of the year, it will allow Wyndeham to compete against York Mailing in particular and will compensate for loss of capacity at Heron.
“WE SEE TWO MARKETS FOR the short gain press,” says Scanlon. “Existing long grain customers who also produce short grain products and who currently procure this from our competitors and also new customers who require in-line finished flyers, inserts etc.” These are used in door drops, instore marketing and as newspaper inserts.
The aim is to maintain the margin if not the sales volume from 2013. Turnover in the year slipped slightly to £120.2 million (£124.8 million) with a pretax profit rising to £4.4 million (£3.7 million). The group has been able to reduce borrowing: institutional net down down to £23.3 million (£29.4 million) and term debt fell to £12.2 million (£16.3 million).
A NEW DIVISION, WYNDEHAM Digital, was started in April, aiming first at the publishing market. “Our publishing customers use digital print for personalising covers, which we can now produce for them. There are also opportunities in the commercial market that we are targeting,” he adds. The Rhapsody prepress business is expanding into digital publishing with customers interested in being able to repurpose content originally designed for print for digital devices. “Overall the group is positioned to exploit market opportunities during 2015,” says Scanlon.
