Polestars results for 2000 and the first quarter of 2001 were characterised by strong core markets but increasing competition from European rivals.


The groups turnover for 2000 fell 2.8% to 494m, although its pre-tax loss was only 1.3m compared to 1999s 3.8m.


It said the supply side of the industry was at its most competitive "for several years".


UK Printing accounted for 76% of turnover and 79% of operating profit. It had "considerable success" in winning new contracts but was "unable to compensate" for the impact of previous factory closures and delays in product launches.


Although the group reduced costs, it suffered from difficulties in commissioning the 3.5m-wide gravure press at Varnicoat.
Turnover for its overseas printing fell by 1m to 72.3m but this included an adverse exchange rate movement of 7.4m and underlying local currency sales rose by over 9%.


The future of UK Packaging looks as doubtful as ever, with a 7% fall in sales due to "low demand and intense price pressure".


Capital expenditure hit 51.2m, with 29.4m going to Varnicoat. Web and sheetfed press installations amounted to 6.6m.


Exceptional costs of 7.9m included redundancy costs and "compensation for loss of office". Now retired chief executive Tony Rudston received 1,886,442, including payments into a funded unapproved retirement scheme established for him.


The three months to 31 December 2000, the first quarter of the new financial year, were extremely busy. Sales rose 9% to 138.4m (or 5% like-for-like excluding the Heliocolor buy and exchange rate movement).


But last years 2.5m net income turned into a 1.5m net loss. The weakness of the euro led to increased competition from the continent and pricing "continued to tighten" in web.


Polestars cash in hand at 31 December was only 700,000. The group is also believed to be seeking 26 redundancies at Watmoughs, with negotiations with the GPMU starting next week.


Story by Gordon Carson