In the results for calendar year 2023 just filed, Walstead Group had gross sales of just under €582m (£486.6m), down 10.3% on the prior year on the back of reduced paper costs.

Net sales, excluding paper, were down 3.5% at €378.1m.

Adjusted EBITDA was down 17% at €34.8m and the group made an operating loss of €800,000, compared to a €13.9m operating profit the prior year.

The pre-tax loss was €10m (2022 pre-tax profit: €6.6m).

Chairman Mark Scanlon described 2023 as a watershed year for the group and said that the overall results were “satisfactory” in the face of a “particularly challenging market”.

He noted that since the Covid pandemic and the war in Ukraine, the landscape for making further buys on the continent was different, and there were now “only one or two potential targets that could enhance our offering and add value to the company – and these may never be put up for sale at a suitable price”.

As a result the group’s M&A focus has shifted to other business areas.

“We are now setting our sights on quality businesses in the wider graphic industries space that offer growth prospects, can be scaled up through selective investment, are well-managed, and generate strong cashflows,” Scanlon stated.

“This will not be a fast-track strategy and it may not be until 2025 or beyond that we get a foothold in a new sector.”

During the period Walstead signed a five-year deal with News UK for weekend supplement production.

This resulted in a big spend and revamp at its Bicester site, part of group-wide capex of €25.4m, which fuelled an increase in the group’s debt. Net debt was up 44.3% at €80.5m at the year-end.

Walstead acquired Gotha Druck’s assets for €10.5m during the period and also restructured its Leykam business, resulting in reduced fixed costs.

The group noted that additional costs and delays around equipment investments and one-off start-up inefficiencies had impacted the operating result.

The separate results for Walstead Bicester record an operating loss of £3.46m on sales up nearly 3% to £39.4m (2022 operating loss: £754,000).

Scanlon singled out creative production services agency Rhapsody for particular praise, with turnover at the business up 4% to €11.3m.

“We expect Rhapsody to continue growing at a heady pace and to deliver strong earning in a growth market,” he said.

Walstead also shut one of two units at Walstead York, with the other unit currently in a state of limbo.

Walstead employs 3,212 people and runs 58 web presses and four gravure presses across its 14 manufacturing sites in the UK, Spain, Austria, Germany, Czech Republic, Slovenia and Poland. It is the largest printer of its kind in Europe, processing around 500,000 tonnes of paper per annum.

“Once again we are particularly grateful for the diligent and dedicated efforts of our teams right across Europe to maintain a first-rate service to our customers,” Scanlon noted.

The group’s largest customer accounts for €33.8m of sales.

Post-balance sheet events include the sale of two freehold properties in June 2024, which brought in €22.6m that will be used to reduce external net bank debt.

Regarding current trading, Scanlon said it had been a steady start to the year, with unaudited net sales for the six months to 30 June down 4.3% at €170m.