After a turbulent year in which PMP’s results fell “very significantly short of original expectations,” Australasia's largest commercial printing company is changing its name to Ovato - from the word Ovation - as part of a new strategy to “reposition the company for the future.”
'Unacceptable': PMP chairman
A PMP spokesperson told Wide Format Online that the Ovato rebrand was expected to be officially launched in February 2019.
In August, PMP posted a net loss of $43.8 million for the year, after losing lucrative contracts for Coles catalogues and Pacific Magazines to competitor IVE Group. It has also faced a number of "critical integration issues” following its 2016 acquisition of the Hannan family’s Independent Print Media Group (IPMG).
“Not only was it an extraordinary period for the heatset print sector it was also a turbulent year for PMP in fiscal 2018,” PMP chairman Matthew Bickford-Smith told a shareholders' meeting on Thursday. “PMP’s FY18 results fell very significantly short of original expectations. After forecasting earnings of $70M EBITDA, we ended the year at $40.6M, which obviously was completely unacceptable.
“At the Group level, sales dropped by $108M, largely due to falling heatset sales after the loss of Coles and Pacific Magazines, but also reflecting the market’s ongoing reductions in newspaper and magazine sales and the consequences of lower pricing,” Bickford-Smith said.
"The surprising three-month delay for the approval of the merger by the ACCC pushed the PMP and IPMG site consolidations and capacity reduction into a very tight time-frame with a number of unforeseen and critical integration issues only becoming apparent in the first half of fiscal year 2018."
But the future looks bright, said the chairman. "There are encouraging signs that the work done over the last six months is genuinely beginning to take hold, translating to significant reductions in the cost per tonne of production.
"PMP is now investing in a new $20 million 80-page press to further reduce our cost base. This will allow older and inefficient presses to be permanently retired, reduce overall print capacity within the Australian print market and to better manage demand and significantly reduce underlying manufacturing costs."
PMP’s CEO Kevin Slaven, appointed in February this year, told the meeting that “the disruptive period of integration which followed the merger with IPMG is now behind us. As a business we have drawn a line in the sand and are looking towards the future. Whilst we continue to acknowledge that Print & Distribution is at the core of our company, we need to reposition the company for the future.”
The new strategic outlook will include the rebranding of the company as Ovato.
'A line in the sand': PMP CEO
“After significant time, effort and process, we have chosen Ovato as our new name,” Slaven told shareholders, who voted in favour of the move. “The word takes inspiration from the word Ovation. The strongest response an audience can give.”
He said the rebranding was “not a simple change of name for the sake of changing a name” but aimed at maximising market value.
“Firstly, the value in bringing our businesses together is significant. We have a diverse group of companies and capabilities that will benefit under a shared identity for the people & teams brought together since the merger to embrace a unified culture.
“Secondly, we need to signal to all stakeholders a significant evolution of the business with an enhanced focus of the value that we deliver for our customers, and finally, our new name will allow us to better present the impact we already have, and are building, in data and technology.”
“The sheer scale of what we do in this space, and the billions of items we print and deliver to people’s homes each year, leaves us with countless data points that until recently, have gone unused. This represents untapped value to customers that we are now bringing to life.”
Slaven said the company’s focus would remain on retail catalogues. “The time I have spent with the leaders of retail has confirmed their commitment to the catalogue as a core part of their marketing mix. This has in turn validated our new Vision and Strategy focused around the retail catalogue. The catalogue connects our marketing customers with the managers in the store and the audience beyond them. It is not an overstatement to say the work delivered by our core print and distribution business is the foundation of retail marketing.“
PMP has also partnered with Quantium, a leading big-data provider. “By combining their data sets with ours, we can now tell our retailers how much revenue their catalogue activity is actually generating at their cash registers.” said Slaven. “By being able to give our clients a measurable return on investment for their print marketing activity, we immediately reinforce the value of print and bring sustainability and growth to the industry.”
The company is moving ahead with plans to update its technology, he said. “The most obvious of these is the investment in the new 80 page press which will be installed and commissioned at Warwick Farm (pictured) before this time next year. This will enable us to reduce our underlying cost base by retiring older less efficient presses and also improve our fleet’s overall productivity. Ultimately the efficiency from having our print and distribution services integrated at common sites essentially provides our clients an extra day in their marketing supply chain. We are building on this advantage with support for workflows around pre-production and downstream into digital and social communications.”
PMP also confirmed it had secured a new $40 million four-year corporate bond “to further strengthen PMP’s balance sheet by improving the mix of long and short term funding while providing a stable platform for the Company to execute on its stated strategic initiatives.”