JPE INDUSTRY REVIEW NIGHT Presented by: Hagop Tchamkertenian Manager, Industry & Commercial Policy Printing Industries Association of Australia

JPE INDUSTRY REVIEW NIGHT Developments in the industry during financial year and over recent years Latest data from Printing Industry Trends Report and Industry Benchmarking study Industry Prospects for 2004 and beyond

Compared to 2002 how was 2003? Good Average Bad Industry Conditions How good are we doing?

Importance of Our Industry A Historical Context A ranking of the 100 most influential persons in history shows: Ts’ai Lun inventor of paper at number 7 Johann Gutenberg “father of printing” developer of movable type at number 8 Gutenberg’s invention facilitated an easier exchange of ideas throughout Europe and helped spread the ideas of the Renaissance

Importance of Our Industry A Historical Context Printing has been the principal vehicle for the conveying of ideas during the past 500 years In Australia the printing industry was one of the earliest industries to emerge after white settlement Industry icon – John Sands was founded in 1837 and was the 2 nd company to be registered in Australia after the Bank of NSW

Industry Significance Current Demographics 5,000 plus firms Employment of more than 115,000 Turnover of more than $17 billion Industry value added of more than $8.5 billion Exports of nearly $600 million Average annual capital expenditure of $724 million Physical presence in every region

How fast did we grow? ABS Data

How fast are we growing now? ABS Data

Tortoise or hare? ABS Data

Recession… technically speaking ABS Data

Investment Trend Downward ABS Data

Contrasting Trends ABS Data

Depressed sales ABS Data

Booming profits? Read the fine print ABS Data

Subdued cost pressures ABS Data

Falling selling prices ABS Data

Margins once again tighten ABS Data

Business expectations remain positive Printing Industry Trends data

Investment intentions strengthen Printing Industry Trends data

Utilisation rates improve Printing Industry Trends data

Lack of orders less of a problem Printing Industry Trends data

Production improves Printing Industry Trends data

So does sales Printing Industry Trends data

Selling prices fall Printing Industry Trends data

Profits improve Printing Industry Trends data

Debtors profile worsens Printing Industry Trends data

Low margins Benchmarking data

For many printing ≠ good returns Benchmarking data

Up for some, down for others

The key to profitability Benchmarking data

The higher the better Benchmarking data

Does idle capacity await you? Benchmarking data

Cash flow gap – 26 days! Benchmarking data

INDUSTRY FORECASTS Paper and Paper Product Manufacturing Employment Production Local Sales Printing and Services to Printing Employment Production Local Sales Publishing Employment Production Local Sales Source: Econtech

Improvements in printing industry economic conditions anticipated during 2004 Pick up expected in advertising expenditure 2004 is an election year Further rationalisation and industry consolidation inevitable Possible improvements in capacity utilisation rates Possible reversal in labour force downsizing Forecasts and Prospects

Exports and import replacement efforts will remain at the mercy of currency movements Currency probably has reached its peak and will begin to depreciate Capital expenditure likely to continue recent trend meaning it is unlikely to reach past peaks Selling prices to continue to be driven down for traditional areas of printing Targeted customisation campaigns to continue to overtake mass marketing campaigns Benchmarking takes off!!! Forecasts and Prospects

Compared to 2003 how will 2004 be? Good Average Bad Industry Expectations: How well are we going to do?