Printer Confidence Index: Larger Printers Indicate Participation in Recovery Please allow a few seconds for the charts and graphs to load. CAP Ventures and WhatTheyThink.com have released this month’s Printer Confidence Index. The data is compiled monthly and helps industry executives understand demand trends and capital spending plans. Summary: April was the fourth straight month with an increase in the percentage of printers indicating demand is stable or continuing to improve. In fact, 35.2% of print providers cited demand in their local market is starting or continuing to decline, down from 54.6% with a negative view in January. Although there is still a negative sentiment among print providers about the conditions in their local market, CAP Ventures observed a significant improvement in market sentiment. Key observations for April include: - Consistent percentage of companies (23.7%) cited improving market conditions - Print growth index improved for the second month in a row. The index (-0.28) is still negative, but has improved every month this year - Only 15.1% of printers expect their print volume in April to be lower than it was in March. In fact, 43.4% of printers expect their April volume to be higher than their March volume. - Net expected increase of 2.1% growth for April over March. This increase is noticeably lower than the 4.9% cited last month (March over February). However, the figure supports sustained growth. - Continued positive 6-month outlook for local market and their business. Respondent Profile Respondents to the April Printer Confidence Index represented a wide range of companies by various business and demographic factors. About 55% of the 206 respondents characterized themselves as general commercial printers primarily offering offset printing services. The other 45% included a mix of digital print specialists (mostly digital), quick printers, prepress services and other graphic service providers. See additional demographic data at the end of this document. Market Conditions for Print - Continued Improving Conditions and Outlook Over the last three months there has been a steady increase in the percentage of respondents citing improving conditions in their local market. In April 23.7% of printers reported demand in their local market is starting or continuing to increase, about the same as in March (24.6%) and higher than February (21.1%), January (14.9%) and December (11.7%).
What is also important to note is that nearly 30% of large printers ($10 million+ in annual sales) cited improving conditions, although many (50%) very large printers ($20 million+) continue to cite declining market conditions. This group has been particularly hard hit by the recession and cost reductions sweeping through Corporate America. However, even for this group things appear to be easing. As a comparison, only 7.1% of printers with annual sales of $20 million or more cited improving conditions back in December. This month 26.2% of these large commercial printers cited improving conditions. CAP Ventures believes the current market conditions are improving in most regions of the country. The South and Mountain regions generally report the most favorable conditions, while the Northeast and Midwest have it more difficult with over 20% of companies citing that "demand continues to track down". It appears the worst of the industry recession has passed and that improving market conditions are rippling through various regions of the country and size of print providers. Other broader economic news continues to be positive including GDP and advertising spending. Current Market Conditions Every month CAP Ventures gives print providers several scenarios to describe their current local market conditions and their operating plans: - Demand continues to increase, we can routinely charge a premium; we are adding capacity - Demand is starting to increase, some ability to charge a premium; we are considering adding capacity - Balance between supply and demand, normal pricing; we have no plans to increase or decrease capacity - Demand is starting to slip, very competitive pricing; we are considering reducing costs or capacity - Demand continues to track down, extremely competitive pricing; we are reducing costs or capacity By assigning a value to each of these scenarios ranging from +2 (demand continues to increase) to -2 (demand continues to decline), we generate a print industry growth index for the month. For April 2002 the index was -0.28, a negative sentiment but an improvement over the March 2002 (-0.36), February (-0.59) and January and December figures (-0.66).
Smaller print providers continue to being doing much better relative to their larger industry colleagues (-0.07). In fact, only 10.1% of printers with under $1 million in annual revenue indicated the most negative sentiment for their local market conditions. This percentage is the lowest of all company size categories. Print Volume Growth Expectation for APRIL - Steady Print providers expect about the same level of business in April as they had in March 2002. Only 15.1% of printers expect their print volume in April to be lower than March, which was a pretty good month for many printers
CAP Ventures has derived an average expected change in print volume using the following formula: Percent of printers expecting an increase (43.4%) multiplied by the average expected increase (8.6%) minus Percent of printers expecting an decrease (15.1%) multiplied by the average expected decrease (-10.6%) equals Average expected change in print volume (+2.1%)
The research continues to suggest improving demand for paper, ink, toner and other consumables. 6 Month Outlook - Starting To Turn The Corner Printers continue to be optimistic about their local market and their business over the next 6 months. Although printers’ outlook for their local market is to grow a modest 1.1% (down from the 1.8% 6-month outlook in March), the figure has been positive for four consecutive months. Printers have a more optimistic outlook for their own business indicating an expected increase of 3.4% over the next 6 months. This 6-month outlook is down slightly from March when printers indicated a growth expectation 4.0%. The combination of a growing percentage of printers citing improving current market conditions and a positive 6-month outlook for their local market and business is encouraging for the industry.
As one print provider noted, "my volume is increasing but I can’t raise prices". There remains a substantial amount of capacity in many markets that is likely to keep a damper on prices, but with rising volumes many print providers may be able to achieve lower costs and improved profits over the coming months. Capital Equipment Purchases - Consistent Activity The near term and mid-term outlook for capital equipment purchases continues to be modest with nearly 40% of printers purchasing some type of equipment last month. In March 38.8% of printers purchased some capital equipment, a level that was noticeably higher than in the previous three months which have been averaging between 30.3% and 31%. Several categories of equipment had higher purchase levels for March than in previous months. Prepress and bindery equipment continue to be the most common item purchased while high-speed digital color printers and production black & white printers are the least common.
CAP Ventures believes the demand for capital equipment will be modest as printers defer decisions until signs emerge for sustained demand of print services. However, recent steady improvements in month-over-month print volume and market conditions suggest higher levels of capital equipment purchases may be near. The increase in percentage of companies purchasing equipment in March (38.3%) compared with other months (around 30.0%) may be a harbinger of improved market conditions for capital equipment. Request more data about this index by contacting Jeff Hayes, Research Director at CAP Ventures. [email protected] ADDITIONAL DEMOGRAPHIC DATA: The sample included a mix of companies by number of employees and annual revenue, including over 25% of the respondents that stated their company revenues for print and related services was $10 million or more. This sample is weighted towards medium to large print providers compared with the overall population of companies in the printing industry. There was excellent representation from all major regions in the United States. The respondents also had a variety of printing equipment including traditional presses, digital production printers, color copiers and wide format printing equipment. The most common device was two-color presses (66.3%), production black & white digital printers like Xerox DocuTech and Canon ImageRUNNER 110 (47.4 %), 5+ color offset presses (40.8%) and color copier/printers (46.4%). The actual respondents were mostly owners, presidents, general managers, VP of manufacturing, and production managers. This group of respondents has a detailed knowledge of their local market conditions and company activities and plans. The mix of respondents by type of print providers, size of company, mix of equipment, geography and title has been very consistent over the last 4 months. This consistent sample profile is important when comparing results over time. |
