The firm’s share price fell 2.12p to a 52-week low of 8p on the profits warning. Analysts had been expecting profits of circa £450k-£500k but forecasts have now been revised down to £200k.
At the same time the firm confirmed that acting chief executive Peter Gunning had been appointed to the role on a permanent basis. Gunning stepped up after founder Tony Rafferty announced he was leaving the business last October.
Grafenia also conducted an external search of potential candidates to replace Rafferty.
Gunning told PrintWeek: “I’m pleased they chose me, although it’s a shame it’s tied in with this announcement. The trade print market has been so much tougher over the past six months. It seems like almost every week there’s a new entrant or someone trying to win market share at very low margins.
“It is challenging but we are trying to pivot the business and move up the food chain to a higher-value position,” he said.
Grafenia has cut costs by improving the terms of some of its contracts with suppliers, while headcount has been reduced by 10 positions to around 105 staff through a combination of redundancies and natural wastage. Its under-performing Reading store has also been closed.
While its trade print service Marqetspace is battling tough competition from other printers in the UK and on the continent, it is still expected to be running at an annualised monthly run rate of £3m by the year-end.
Gunning also said that Grafenia was “pleased with the momentum” that was building behind its Nettl web shops and it had exceeded 50 branches this week.
Most of the Nettl outlets were previously Printing.com franchises, and Gunning said Grafenia had also completely re-thought its Printing.com offering with a new subscription model.
“We’ve torn up the one inch thick franchise agreement on vellum and have replaced it with a simple subscription model,” he explained.
“For £299 a month people can have the W3P software, use of the brand and all the cool stuff we have built up, as well as marketing support and collateral. It isn’t inconceivable that we will see the Printing.com network expand – it’s early days but we are seeing progress.”
He said the firm’s recent Expoganza roadshows to launch its ink on fabric range had proved successful with around 500 attendees, and the events had also had knock-on benefits for its other services.
“There’s a lot of appetite for fabric and we are lending our display kit out so our partners can hold mini events of their own and get it in as many faces as possible. Unfortunately our new offerings are slightly lagging on revenues,” Gunning said.
Grafenia posted sales of £17m in its 2014/2015 results but has since sold its Dutch web-to-print business. Its financial year runs to the end of March.
