Gross profit increased for the printing group to £4.35m, but as a percentage it reduced from 57.5 percent to 52.4 percent, which Grafenia attributes to three drivers.
In a statement, the company says: “Firstly, our input costs have increased. Almost all of our raw materials are sourced from Europe, or paid in US Dollars. Like the majority of printers, we've suffered from increased pricing on paper, our biggest raw material purchase. This has been exacerbated by demand for paper pulp created by the packaging industry and the drive to move away from single-use plastics.”
Like the majority of printers, we've suffered from increased pricing on paper, our biggest raw material purchase”
“Secondly, the margin characteristics for sign production are different to litho printing. As signage becomes a larger part of our business, we would expect the percentage to change in line and move closer to 50 percent.
“Thirdly, despite rising costs, wholesale print prices continue to fall as competitors discount to grow market share. We monitor market pricing and take defensive action to maintain competitiveness.”
The 23 percent increase in gross profit compared to the corresponding year can be attributed to a full six month’s trading of the Image Group, (which the group acquired in July 2017) compared to just 10 weeks in the previous interim period, as well as added revenue of two businesses the group did not own in the comparative period.
Grafenia expressed in its half-year report that its plans to launch Nettl of America “will be a headwind to our reported operating costs in the coming half-year and into the next fiscal year. However, the opportunity is significant.”
Grafenia owns several brands which manufacture print, signs and display for SMEs.
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