Printers should "explore new opportunities" to counter drop in margins

Printers should explore new opportunities to enhance their range of products and services to weather the economic downturn, according to Howard Matthews, chief executive of Loricas and vice-chair of the DMA mailing council.

Matthews spoke as new Office of National Statistics figures (ONS) showed the UK economy shrank by 0.2% in the final quarter of last year, with the manufacturing sector contracting by 0.9%.

The business, services and finance sectors remained flat in Q4, following an increase of 1.2% in the previous quarter.

Matthews said: "The main problem we are experiencing – and I have heard similar stories from around the country – is with margins, not volumes.

"Our volumes are up but our margins are down, to the extent that we made a small loss in the last financial year for the first time in 22 years. This year, we expect to make a small profit, but if we had been working with the same prices we had two or three years ago, our profits would have been a lot higher.

 "The good news for Loricas is that we have become involved in response-handling and fulfilment, and margins in those areas are staying up. I don’t think we will see any recovery before 2013, but those companies that try and offer something a bit different – provided they have done their research – will be best-placed to weather the storm, and first off the starting block when things recover."

Other printers, including 4DM, found December volumes to be below average.

4DM group sales and marketing director Lance Hill said: "December was a bit of a blip, following a fantastic autumn. However, the good news is that January has been very good and February is also set to be a busy month."

The drop in economic activity marks a sharp fall from the third quarter of 2011, when gross domestic product (GDP) expanded by 0.6%.

Throughout the whole of 2011, the economy grew by 0.9%, the figures show.

Chancellor George Osborne said of the figures: "They are not entirely unexpected because of what’s happening in the world and what’s happening in the eurozone crisis. The truth is that dealing with those problems is made more difficult by the problems in the eurozone."