Acquisitions, Cost Cuts Lift Printers Profits

-- Graphic Arts Online, 8/6/2008 6:04:00 AM

Multi-Color Corp. reported  Q1 revenues increased 52% to $79.5 million, as the result of its acquisition of Australia’s label maker Collotype (e-GAM 11/15/07), but North American sales decreased 7% compared to the prior year due to a reduction in orders from a major customer. Gross profit of the Cincinnati-based company increased 52% to $5.1 million, hampered by the company's Batavia, OH facility during the quarter—start-up costs associated with a manufacturing expansion project had a negative impact during the quarter.

CEO Frank Gerace said its Collotype label business performed very well during the quarter, but it experienced "negative organic growth due to lower orders from our largest customer. In addition, continued start-up costs associated with our manufacturing expansion project had a negative impact during the quarter. In summary, these three factors contributed to our flat earnings year over year."

In related news, Journal Holdings, a subsidiary of Journal Communications, agreed to pay $200,000 under an agreement with the U.S. Environmental Protection Agency to settle allegations that the company's former label printing plant in Norway, MI, sold to Mutli-Color in 2005, violated clean-air regulations.

Mod-Pac Corp. reported its cost-cutting efforts, combined with a 1% increase in sales, helped the on-demand commercial printer and manufacturer of custom paper board packaging cut its Q2 loss more than in half, from $1.3 million in the prior year to $500,000.

The printer has been consistently losing money since losing its biggest customer, VistaPrint, more than three years ago. Sales inched up to $11.1 million from $10.9 million.

Mod-Pac's cost cutting efforts, which included the elimination of 30 jobs at its Buffalo, NY printing plant since December, trimmed its selling and administrative expenses by 10% during the quarter.

Sales of folding cartons were flat, holding at $8.6 million, while print service sales improved slightly to $2.3 million from $2.2 million. 

Print service sales, which include commercial and personalized print products and services, were $2.3 million in the quarter compared with $2.2 million in the same period the prior year. Commercial print product sales increased 36% to $1.2 million. 

Consolidated Graphics Q1 revenue jumped 10% to $285.2 million, while net income fell from $11.6 million, in the prior year, to $9.6 million.

"We believe that we are seeing the negative impact on our volume of business and selling prices caused by the current weakness in the U.S. economy,” says Joe Davis, CEO. “We are carefully monitoring our expenses, and expect to respond rapidly to any further deterioration in revenues.”

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