Economics & Research Blog

Printing Profits Still Struggling, but Rebound from Q4-2012

By Dr. Joe Webb
Published: June 21, 2013

US commercial printing profits rebounded from their tough fourth quarter of 2012, where the industry showed a loss of -$400 million.  Profits for the first quarter of 2013 were +$850 million. Excluding the losses in Q4-2011 and Q4-2012, Q1 profits were the lowest positive quarter since Q1-2010. These data have been inflation-adjusted. We prefer to look at inflation-adjusted shipments as a 4-quarter moving total since profits can fluctuate significantly. The chart below shows that profits have had trouble getting above the lows of 2005. (click chart to enlarge). The black line indicates the lows of 2005.

Note that profits are staying positive, while industry revenues are declining. This usually means that unprofitable printers are exiting the market, and their poor performance is no longer included in industry profit levels. While it's far more glamorous to talk about industry consolidation in terms of mergers and acquisitions, the exiting of profitless firms through closure or bankruptcy is far more common. The business of the defunct businesses is absorbed by better performing businesses with obviously better cost performance.

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