Commercial Printing: Sales Growing But Not Enough to Lift Profits

By Andrew Paparozzi
In April 25, 2011

Preliminary first quarter 2011 results show that growth is finally returning to our industry. But growth is nowhere near strong enough to restore profitability, not with costs rising broadly, or pricing power. Among the specifics for the NAPL Printing Business Panel:

• Sales increased 4.3% from January through March, with 53.3% of the Panel growing and 43.7% growing at least 5.0%. In comparison, the Panel’s sales fell 3.9% during for the first quarter of 2010, with just 40.4% growing and just 29.4% growing 5.0% or more.

• Although the top line is now growing for the majority of the companies we survey, the bottom line is growing for just slightly over one third. Their list of obstacles to profitability is headed by rising healthcare costs, the limited ability to raise prices—just one-quarter report prices are above year-earlier levels—and an improved but still very fragile economy. What about paper prices? They’re a little further down the list only because our survey group has had more success passing along increases in materials (paper, ink, toner, etc.) than anything else.

This is a sign of what’s ahead. Our costs are likely to continue rising faster than our prices as recovery progresses, creating a classic profit squeeze. We beat the squeeze by both preparing clients for price increases and by maximizing productivity and minimizing costs as vigilantly during recovery as we did during recession. We’ll talk about how in theNAPL State of the Industry Strategic Perspective: 2011 to be published in June.

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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