Australia / Analyst Insights
Printing companies are being forced to diversify and consolidate

What information do you want to see from IBISWorld on COVID-19? We'd love to hear from you

by Celine Pascal
Apr 11 2017

The recent merger between PMP and IPMG is representative of the consolidation taking place in the printing industry, as they face the challenges of operating in the digital age.

The difficult trading conditions of the digital age have forced companies in the printing industry to diversify and consolidate. Although the ACCC opposed a merger between PMP and IPMG in 2001, recent acquisition activity within the printing industry has seen a new merger go through.

In March 2017, the printing industry’s two largest players, PMP Limited and IPMG Pty Limited, completed a merger agreement after receiving ACCC approval. As a result, ASX-listed PMP acquired the shares of the family-owned IPMG. The recent negotiations were not the first time a merger between the two companies had been tabled. In 2001, PMP proposed to merge with IPMG, which was trading as Independent Print Media Group at the time. The ACCC opposed the move and merger negotiations ceased.

However, times have changed. The growing dominance of the digital platform has disrupted the printing industry, with revenue decreasing for printing companies over the past five years. This decline will likely continue, with revenue forecast to decline at an annualised 2.3% over the five years through to 2021-22, to $6.7 billion. Fierce competition among printers and difficult trading conditions, largely driven by digital disruption, have led to company acquisitions, with firms seeking to stimulate revenue growth.

PMP provides printed communications, marketing and advertising solutions in Australia and New Zealand. In 2015-16, the company’s industry-specific revenue dropped by 14.6%, to total $334.9 million. Weaker industry demand and a receivable impairment, due to the closure of its client Dick Smith, have contributed to revenue declines and a 97.7% fall in Net Profit After Tax (NPAT).

IPMG Pty Limited was the largest player in the printing industry before its acquisition. The company publishes, prints and provides digital media services. IPMG’s industry-specific revenue declined by an estimated 4.6% in 2015-16, to total $330.0 million. Although industry-specific revenue declined, the company’s overall revenue increased by 1.0%, largely due to the company’s marketing services. In the printing industry, major players have had to transition to providing integrated services, including marketing and distribution, to expand their market shares and diversify their revenue streams. IPMG’s industry-specific revenue decline and decrease in NPAT are largely due to redundancies and other related restructuring costs in 2015-16.

Ive Group Limited, which listed on the ASX in 2015, provides print communications and marketing services in Australia, New Zealand and China. Ive Group’s total revenue increased by over 20% in 2015-16, to reach $372.4 million. Ive Group’s revenue growth can be attributed to the company’s acquisitions, most notably those of marketing agency JBA Digital in May 2016, and communication provider Laser Computer Services (Vic) in February 2016.

Recent digital trends have shaken up the printing industry. Industry players have been forced to find ways to increase their revenue streams by diversifying into integrated services and acquiring competitors. While some companies have struggled, PMP Limited’s market share is expected to double following its acquisition of IPMG. However, competition from digital companies will continue to intensify and industry firms will have to continue adapting to remain viable.

Related companies:

PMP Limited

IPMG Pty Limited

Ive Group Limited