A healthy seasonal boost ensured that 2018 finished stronger than it started for the UK printing industry, at least as far as the volume of output and orders are concerned, according to the BPIF’s latest Printing Outlook.
The quarterly study of the health of the industry found that 53% of printers increased their output levels in the fourth quarter of 2018. A further 34% held output steady while 13% experienced a decline in output.
While the Q4 period benefitted from the strongest seasonal boost for three years, the BPIF said it has not returned to the levels last seen in the years preceding the 2008 financial crisis.
Numerous comments from survey respondents referred to turmoil, uncertainty and unpredictability, and while a number of companies have traded well there are common perceptions that they are ‘bucking the trend’.
Fewer printers are expecting to see their activity levels increase in Q1. However, output growth is forecast to increase for just over one-third (34%) of companies.
45% of respondents predicted that they will be able to hold their output levels steady in Q1 while a further 21% said they are expecting their output levels to fall.
“It was pleasing to see quite a healthy seasonal boost, as we would normally expect but don’t always get, at least not in the last couple of years,” said BPIF research manager Kyle Jardine.
“Confidence did pick up in the quarter, but it is expected to nosedive again this quarter, though this will depend on what does or doesn’t happen [with Brexit].
“If it looks like a no-deal is actually going to become a reality then I guess confidence might stay a bit lower for longer, but if there are signs of a deal being made then confidence might come back quicker.”
Competitors’ pricing below cost has returned to become respondents’ most voiced business concern, with 60% selecting it as one of their top three concerns.
Brexit has continued to climb the rankings and is now the second most voiced concern, selected by 58% of respondents – up from 44% last quarter. Paper and board prices, which was the top ranked concern in the last quarter, came third this time, selected by 53% of respondents.
Access to skilled labour, energy costs and poor output price levels were all further back in the ranking.
The majority (91%) of respondents said they plan to make some investment in plant and machinery in 2019 and 47% said they anticipate increasing the amount they invest in these areas.
“It’s pleasing that investment is looking to pick up after a couple of years of some curtailed investment. I think part of that was the hope that this situation will be resolved, and uncertainty removed at some point quite soon,” said Jardine.
Printers have continued to report that they are under pressure to accept longer payment terms by some customers. 48% of respondents reported that they had been obliged to accept longer payment terms from customers in 2018 in order to help retain or secure business.
Of these, 12% were for terms up to 60 days and 64% for up to 90 days. 22% said they felt obliged to accept payment terms of up to 120 days – a significant increase from 7% last year – and a further 2% in excess of 120 days.
Elsewhere, the study found that 34% of respondents are currently stockpiling some supplies, up from 17% in the previous quarter.
Furthermore, the number of printing and packaging companies experiencing ‘critical’ financial distress decreased in Q4 but those under ‘significant’ financial distress increased.
There was also a dramatic increase in the level of bad debt, though access to finances has generally improved in the last 12 months.
The BPIF Outlook survey was carried out during 2-18 January 2019 and polled 132 companies employing 7,638 people with a combined turnover of more than £962m.
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