RR Donnelley grew its revenue to 4.8bn ($8.4bn) in 2005 from 2004's 4.1bn, a 5.5% rise, largely due to the acquisitions of Astron Group, Asia Printers Group and Poligrafia. RR Donnelley reports revenues in three segments: publishing and retail services (8.4% growth); integrated print communications (5.6% growth); and forms and labels (-1.8%). Forms and labels continues to be a shrinking market and comprises 20% of the business. The firm posted a -6.6% operating margin for Q4 2005, a significant loss, which it attributes to its acquisitions.
Quebecor World presents a different picture. Revenues for the Q4 2005 were down 9% over 2004, from 1bn to 980m. For the full year, revenues were 3.6bn, down 1% on the previous year. Fourth-quarter revenues in North America were down 5% as compared to 2004. For Quebecor, magazines and catalogues were down 5% and 1%, respectively, for the full year, and books and directories were down 5%. It blames it on lost customers, soft pricing, operational woes and its European operations. The firm's outlook for 2006 is also bleak, with president and chief executive Pierre-Karl Pladeau stating: "There is no quick fix in this business."
Consolidated Graphics' fiscal year ends in March, so full-year results have not yet been released. But the firm's Q3 results were strong, with 8% revenue growth over the same quarter in 2004. Consolidated Graphics attributed its strong results to acquisitions and a 39% year-over-year increase in national sales, and projects strong full-year results.
In comparing the three companies, one thing is clear. Both RR Donnelley and Quebecor World are diversified, their businesses mixed between growing and declining markets. Consolidated Graphics has placed a solid focus on becoming the marketing materials expert for its clients. It continues to acquire companies with expertise in this area, and it is building a national production platform tuned to the manufacture of those marketing materials in a hybrid digital/offset model. That focused strategy seems to be paying off and sends a strong message to smaller firms.
Cary Sherburne
Senior editor
WhatTheyThink.com
cary@sherburneassociates.com
Letter from the US
The current business climate has not been kind to North Americas printing industry. Printing shipments continue to decline on an inflation-adjusted basis despite a strong overall economy. But inside that gloomy picture, there are lots of bright spots, especially among some dynamic firms that are rapidly reinventing themselves to meet the challenges of the changing world of business communications. Many of these success stories are smaller, entrepreneurial firms that are leveraging digital technologies to expand their reach beyond simply putting ink on paper. But it is also interesting to examine how the industry giants are performing.
