In the six months to 31 December print sales at the West Midlands business fell 6.3% to 12.7m, mainly due to larger customers supplying their own paper. Print's operating loss increased to 307,000. Group sales were 13.3m (2003: 14.2m)

Cradley's share price fell 11.7% to 13.25p after the results were announced yesterday (31 March).

Managing director Chris Jordan said timing changes on some large projects had pushed work into the second half, which had impacted the figures. "The balance between loading and margin is very difficult these days," he said. "Our second half will be more straightforward."

Cradley also appears likely to benefit from the displacement of work from fire-stricken Graphoprint. The company has a similar press set up, with three 32pp webs and two 16pp machines, and has expertise in small formats and press finished products. "A lot of their work is very similar," Jordan said.

Cradley plans to promote its specialist offerings through a marketing campaign this year. "We are aiming to carry on the development of our market. There is no point aiming to compete with the new capacity coming into the industry," he added.

A complete restructure involving "significant but necessary upheaval" in its publishing business lead to an operating loss of 375,000 on sales of 643,000 in that division. Publishing is expected to generate a profit going forward.

The group maintained its gross margin of 12% and chairman John Wheatley said he was "encouraged" at the growth of specialist niche print work, with a number of key accounts secured during the period.

Story by Jo Francis