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Printing Profits Up

This morning&

By Dr. Joe Webb
Published: April 13, 2007

This morning's manufacturing financial report from the Department of Commerce showed that the printing industry did increase its profits in 2006 and in the fourth quarter compared to the prior year. When we analyze the profits data, we do so on a 4-quarter moving total because there are significant season changes from quarter-to-quarter. We also adjust for inflation using the Consumer Price Index. Printing profits for 2006 were $4.04 billion dollars on an inflation-adjusted basis. This compares favorably with $3.09 billion for 2005, a 30.7% increase. The moving total of annualized industry profits before taxes has improved four quarters in a row. For comparison's sake, the 12-year annual profits as a percentage of sales is 6.7%. In 2006, we were at 4.5%. Industry profits before taxes peaked in 2000, when they reached $13.8 billion; we are still quite a distance from that kind of performance. For the fourth quarter, profits before taxes were 2.16% of sales; in 2005, they were only 1.3%. Profit improvements are still coming from downsizing of the non-production workforce as energy, paper, and other increased costs of inputs are not being passed in prices. We will have a detailed analysis of this in about two weeks. The paper industry, recently requesting tariff protection against imports of coated paper from China, had profits before taxes of 15.29% of sales in the fourth quarter. Last year in the same quarter, the Commerce Department reported that they had a small loss. For 2006, the paper industry's average quarterly profit was about 6.8% of revenues.

Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink.com's Economics and Research Center.

What do you think? Please send feedback to Dr. Joe by emailing him at drjoe@whattheythink.com.

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