PIA/GATF Ratios Show Printing Industry Profits Decreasing
PITTSBURGH--October 8, 2008--Printing industry profits decreased slightly over the past year according to the recently completed 2008 PIA/GATF Ratios reports. The sluggish economy and slowing print markets pulled down printers' profitability over the past year (2007-08).
The average printer's before-tax profit on sales was 3.1% over this past year. This was a decrease compared to 3.4% in the 2007 survey; it also is within the 3.0-3.4% range experienced from 1995 to 2001. This is the first decrease in profits in the last six years; at this rate the industry will earn approximately $5.4 billion in total profits over the course of the year.
Profit leaders - printers in the top 25% of profitability - saw profits decrease slightly to 9.7% as compared to 10.1% in the prior year. Despite the small decrease, profit as a percentage of sales for profit leaders remains at the same level it was at in the mid to late 1990s. For all printers, the average profit of 3.1% equals the rate earned in 2001 before falling during and after the last recession.
According to our 2008 survey results, materials accounted for the largest single cost category for the typical U.S. printer - approximately 34.95% of sales. Paper alone consumed more than one-in-five sales dollars last year. Other major costs incurred by printers last year included factory payroll (25.13% of sales), factory expenses (16.97% of sales), administrative expenses (9.66% of sales), and selling expenses (8.97% of sales).
Total materials expenses decreased from 35.44% of sales in 2007 to 34.95% of sales in the 2008 survey. Printers spent slightly more on factory expenses in 2008 (16.77% of sales in 2007 vs. 16.97% in 2008). Selling expenses increased from 8.77% to 8.97%, while administrative expenses also crept up slightly for the second consecutive year - from 9.57% of sales in the 2007 survey to 9.66% percent of sales in 2008.
Sales-per-employee for all printers decreased to $146,247 (down only 0.30% from 2007 levels). For profit leaders, though, sales-per-employee increased from $155,161 in 2007 to $159,195 in 2008.
Additionally, sales-per-factory employee increased among all printers by more than $2,000 from 2007 figures and averaged $196,742 in 2008. For profit leaders, sales-per-factory employee increased by an even wider margin, growing from $203,317 in 2007 to $210,418 in 2008.
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