Printers saw some measure of improvement in trade in the final quarter of last year with both demand and output rising on balance, according to the latest BPIF ‘Printing Outlook’ survey results covering the three-month period from October to December 2011. This positive result is qualified by the survey’s finding that both indicators remain below the levels previously forecast.
Business confidence among respondents during the final quarter of 2011 didn't match previous expectations - with less than a quarter of UK printers (23%) recording a rise in new domestic orders compared with the 35% that had anticipated improvement in these three months ago. However, with the 23% of respondents reporting improvement outweighing the16% reporting deterioration, confidence in Q4 was still positive on balance, the first time in three quarters that this has been the case.
Although little improvement in domestic demand is expected in Q1, with almost 75% of printers expecting a similar order pattern to emerge to that experienced in Q4, there is a positive balance among the rest that expects some improvement. Exporters though are less confident about their order prospects for Q1, with overseas markets weakening and concerns growing over developments in the Eurozone.
While respondents considered on balance that the state of trade had improved in Q4, the balance of +7 was below expectations. This slow start to 2012 is reflected in a low level of confidence for Q1, with only 5% of survey respondents expecting to see an improvement in general business conditions and almost half expecting trade to dip.
Capacity utilisation remains an issue, with less than 0.5% of firms at full capacity. However this did not have any discernible impact on employment levels during Q4, which continued to hold steady in line with earlier expectations. No significant shift in employment levels is anticipated during Q1 either.
Input costs continue to increase, in particular energy costs. While paper costs are expected to stabilise following a series of price hikes throughout last year, further ink price rises are expected in the first quarter of this year. With few firms able to raise prices and many more subject to price decreases, margins continue to be under pressure and are expected to remain so. Combating the squeeze on margins continues to prove as difficult as ever. No less than 31% of firms had expected to raise price levels during the final months of last year, in the event just 5% were able to do so. 28% had to cut prices in order to compete for business, instead of the 13% that had expected to do so.
Public sector work is still falling but the rate of decline appears to have slowed. 39% of respondents reported to be suppliers to the public sector, half of these recorded a change in the value of their public sector work in the last three months. The average change was a decline of around 6% in value; somewhat less that than the 35% decline reported last quarter.
'Competitors pricing below cost' continues to be the issue most selected by respondents as one of their top three business concerns - 88% of companies on this occasion; marginally up from 87% last quarter. However, 'survival of major customers' has increased in importance and become the next most important issue - selected by 40% of respondents. 'Paper and board prices' also remains in the top three with 24% of respondents, closely followed by 'late payment by customers' (21%).
More printers are looking to invest in plant and machinery during 2012, primarily in order to secure productivity improvements. No less than 91% have earmarked investment, with more than a third anticipating spending more than in the previous 12 months. A further 28% expect to spend the same, the same percentage as those believing they will be investing less. Financing this may prove challenging though, with the vast majority of respondents reporting no change whatsoever in their ability to access finance in the last year. Furthermore a balance of 8% reported an increase in the cost of bank lending facilities in the year to December 2011 and a balance of -6% experienced deterioration in supplier credit lines during December.
BPIF Research and Information Manager Kyle Jardine said: “Although we are concerned that the levels reported for demand and output by respondents this time remain below those previously forecast, we can nevertheless breathe a sigh of relief that both improved in the final three months of last year. And while the current state of trade for Q4 failed to match the hopes expressed in forecasts made three months ago, we can take also some comfort from the fact that the balance of respondents was still positive about this nonetheless - the first time in three quarters that we have had such a result. Looking ahead, while we begin 2012 with confidence at a low ebb, prospects could pick-up as the Olympics and Euro 2012 boost advertising expenditure and Drupa stimulates investment activity.”