Litho Supplies hit by price pressure

Despite having cut overheads to the bare minimum Litho Supplies interim results show that pricing pressure, due to overcapacity, is having a negative impact on margins.

For the first six months of the year the firm recorded sales of 28.7m, down 17% on the same period in 2001, while its pre-tax profit fell 33% to 1.06m.

Litho Supplies joint managing director Gerry Mulvaney said that last years restructuring, which saw its satellite centres merge into its super-centres at Greenford and Dewsbury, had streamlined the company.

But he said: "At the moment there are lots of ifs and buts the industry is difficult to predict. I think printing was hit harder in the second quarter than other manufacturing industries."

He added that business in May and June had been tough, with figures from the Office of National Statistics showing that print industry output fell 6.44%.

Despite this the firm had a successful Ipex, with a strong demand for CTP platesetters and plates.

"Printers are struggling to increase their prices, so theyre looking to reduce their costs. Theres a lot of pressure on suppliers at the moment," said Mulvaney.

Litho Supplies has also decided to jettison its chemical manufacturing divisions. Varn has taken over Lonchem, while CK Chemicals has been sold back to the Byford family.

A new trading agreement between Litho Supplies and Varn will ensure that the range of chemicals previously supplied by Lonchem will still be available.

Litho Supplies Belgian subsidiary AM Graphidec will be put into liquidation, after no viable restructuring plan was forthcoming, following the companys moratorium in April.

"We remain confident in the industry and our ability to run the business. But Im not so confident that the industry will look as it does in 12 months time," said Mulvaney.

Story by John Davies