Litho Supplies to quit digital after second profit warning

25 February 2009

Business

Litho Supplies has pulled out of its Xerox digital printing offering and warned that it will report a greater-than-expected loss for the coming year.

In a statement released to the London Stock Exchange, the AIM-listed company also said group turnover is expected to be in the region of £48.5m for the year – slightly down on previous forecasts.

This is the second profit warning within six months for the Breaston, Derbyshire-headquartered company, having reported in November that bad debt would result in a loss for the year.

Litho Supplies said it would also incur a one-off write-down on inventories as a result of its decision to exit the digital printing market. The move does not affect Andersons its wide format division.

Chief executive Michael Hammond told PrintWeek: "We were finding it difficult to make a profit with little or no added value in the digital division and decided to concentrate on what we do best."

He added that the company was to review the service offered to existing digital customers over the coming 12 months.

The consumable supplies company is also in "constructive discussions" with its bankers to increase banking facilities.

Hammond said that extending facilities would give the group more comfort and headroom in the current market conditions.

He added that he expected 2009 to be flat in terms of trading, but predicted growth in some areas of the business.

UPDATE: This article has been updated to clarify that it is only the company's Xerox division that is to be discontinued, not all its digital services.