Business Trends and Overview of Competitiveness Issues in the European Printing Industry Anne-Marie De Noose Tallinn, Novtember, 2005 INTERGRAF 1
Tallinn, Novtember, 2005 INTERGRAF 2
The European Printing Industry Western Europe (EU 15) 90, 000 companies 700, 000 employees 82, 5 billion EUR turnover Figures for EU 25 are still difficult to collect Tallinn, Novtember, 2005 INTERGRAF 3
Tallinn, Novtember, 2005 INTERGRAF 4
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How and what about SECTORAL Statistics in the EU ? ! • Poor and disappointing for a sector consisting mainly of SMEs ! • EUROSTAT is in charge of : – establishing classifications (both activities NACE & products, CPA, Combined Nomenclature), – Regulations on collection of statistics, centralizing data. • Source of data is either administrative (customs declarations, VAT returns) OR Tallinn, Novtember, 2005 INTERGRAF 6
How and what about SECTORAL Statistics in the EU ? ! Enquiries • The “enquiry” source is the less efficient ! – Regulation plans for obligatory collection in companies employing more than 20 workers; significant loss of information for printing sector – Companies miss time and expertise to participate, questionnaires are complicated. • PRODCOM : enquiry on production volume and value • STRUCTURE OF BUSINESS : data on companies (number & employment), investment, utilization of production capacity Tallinn, Novtember, 2005 INTERGRAF 7
How and what about SECTORAL Statistics in the EU ? ! • Individual national initiatives – Belgium : National Bank collects data – Printing national federations organize “opinion polls” : eg BPIF in UK, Febelgra in Belgium on various indicators (order books, paper price, sales prices), BVDM in De. – Results are produced as indexes, or bulletins Tallinn, Novtember, 2005 INTERGRAF 8
Part 1 : General economic trends Tallinn, Novtember, 2005 INTERGRAF 9
INFLATION RATE Annual average rate of change in Harmonized Indices of Consumer Prices (HICPs) Tallinn, Novtember, 2005 INTERGRAF 10
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INFLATION RATE Annual average rate of change in Harmonized Indices of Consumer Prices (HICPs) September 2005 FI NL IT FR DE AT Euro-zone PT IE BE EL ES LU 1. 1 1. 7 p 2. 2 2. 4 2. 6 p 2. 7 2. 8 3. 0 3. 8 4. 7 EU Member States outside the euro-zone SE PL CZ MT CY SK DK UK 3 EU 25 LT SI HU EE LV 1. 1 1. 8 2. 0 2. 1 2. 3 2. 4 Aug 05 2. 4 2. 5 p 2. 6 3. 2 3. 6 4. 9 7. 4 Tallinn, Novtember, 2005 INTERGRAF 12
Real GDP growth rate at constant prices (1995) - percentage change on previous year Tallinn, Novtember, 2005 INTERGRAF 13
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GDP per capita in PPS GDP per capita in Purchasing Power Standards (PPS), (EU-25=100) Spring 2005 Report to the Council Tallinn, Novtember, 2005 INTERGRAF 16
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June 2005 compared to May 2005 Industrial producer prices up by 0. 5% in euro-zone Up by 0. 4% in EU 25 Tallinn, Novtember, 2005 INTERGRAF 18
Volume of retail trade % change compared with the same month of the previous year 1, 4 EUROZONE Books, newspapers and other sales in specialised stores Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 0. 1 0. 8 0. 9 -1. 3 1. 1 EU 25 Books, newspapers and other sales in specialised stores Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 1. 2 0. 9 1. 1 -1. 9 0. 9 Tallinn, Novtember, 2005 INTERGRAF 19
Part 2 : Printing Industry Trends Tallinn, Novtember, 2005 INTERGRAF 20
Trends in turnover as for printing industry as a whole in 2004/5 Reported increases range from 0. 7% (DE) to about 13% (MT) & (ES). DK +3, 80% DE +0. 7% (after a 10% drop over last years) globally, domestic orders +0. 4%, foreign orders +2. 5% IT Production +3. 8%. Turnover increased by 3%, (compared with -0. 8% of 2003). Estimated turnover for 2004 : 11771 mln €. Tallinn, Novtember, 2005 INTERGRAF 21
September 2005 Tallinn, Novtember, 2005 INTERGRAF 22
Trends in turnover as for printing industry as a whole in 2004/5 MT Sales of print/publishing increased significantly in 2003 (+/- 6%) and remained at high level in 2004. Added value /capita followed the same curb. Investment almost doubled in 04 against 03. NO + 2 to 5% PT Print/publishing improved by 5. 8% last 12 months Tallinn, Novtember, 2005 INTERGRAF 23
Trends in turnover as for printing industry as a whole in 2004/5 Recovery by 1. 5% in 2004 (2, 244 billion euro) based on higher demand higher raw material prices. UK Slight improvement in 2004. Sales of printed ES SE Production index : 2003: 112. 1, 2004: 119. 4, 2005 1 st. Q 125. 8. , ie +7%, 13% Tallinn, Novtember, 2005 products were -1. 2%, -2. 3% and -3. 6% between 2001 & 2003. INTERGRAF 24
Trends in turnover as for printing industry as a whole in 2004/5 globally stable in spite of some fluctuations FR After an improvement for the printing industry in the 3 first Qs of 2004, printing activities drew back in 4 Q. Early 2005 trends remain hesitating, also negatively influenced by higher cost for raw material and transport. Sct CH Stable but unsatisfactory Tallinn, Novtember, 2005 INTERGRAF 25
Short-term developments in turnover for industry as a whole, paper and graphic industry. Source : VSD Industry as a whole Tallinn, Novtember, 2005 Paper Industry Graphic Industry INTERGRAF 26
Trends in turnover as for printing industry as a whole in 2004/5 Range of decrease : - 0. 6% (NL) to above - 10% (AT). AT Production – 15. 1% (Sold production however – 10. 8%) BE 04. 2005/04. 2004 -1. 71% in nominal terms. FI -4% NL 2004 : -0. 6% (demand rose by 0. 8% prices dropped by 1. 4%). For 2005 forecast : growth 2. 8% Tallinn, Novtember, 2005 INTERGRAF 27
Overview of market segments Tallinn, Novtember, 2005 INTERGRAF 28
Trends in turnover in market segments Belgium Tallinn, Novtember, 2005 INTERGRAF 29
Trends in turnover in market segments DK Books & leaflets increased while magazines and . periodicals decreased DE Improved trends in advertising market influenced positively several market segments (detailed table) NL Significant differences between the market segments : newspapers – 9%, stationary printing +9%. Printers of packaging and advertising material +1%. Tallinn, Novtember, 2005 INTERGRAF 30
Trends in turnover in market segments Germany Tallinn, Novtember, 2005 INTERGRAF 31
Trends in turnover in market segments IT Dynamic market for books and periodicals (+3. 1%), success of inserts, and successful free sheets. Advertising and commercial printing performed well +4. 2%, SE Significant differences between the large companies (growth rate +3. 5%) and small companies (+2. 2%) many of them disappearing from the market. Traditional printing had a modest recovery, while digital printing and ancillary services had a relative success. They will get stronger as customer will look increasingly for "communication solution' from a single provider. Tallinn, Novtember, 2005 INTERGRAF 32
Trends in turnover in market segments : UK Tallinn, Novtember, 2005 INTERGRAF 33
Trends in advertising No country reported any longer a general decrease !! Reported increases range from 1% (DE) to above 10% (ES), (FR during part of 2004) and even 19% in PT. Strong variations in the distribution of increased shares, internet advertising improves in all countries. After general increase in first part of 2004, some countries mention a decline at the end of the year. Tallinn, Novtember, 2005 INTERGRAF 34
Trends in advertising BE DE significant increase over several years : 2000 : +8. 16%, 2001 : +2. 2%, 2002 : +10. 36%. 2003 : +10. 68%, 2004 : +7. 42%. +1% (after -13% in 2001/2003). Decline of advertising in newspaper in 1 st half 2005 DK general increase by 6. 5%; free sheets +9. 2%, direct mail +6. 9%, other printed ad material decreased by 12. 5% ES +. 6. 9% as a whole (magazines +10. 5%), posters +4% FI increase in 2004 (more in electronic media than printed media Tallinn, Novtember, 2005 INTERGRAF 35
Trends in advertising after improvement up to 12% growth mid 2004, decline to 7. 6% growth 4 Q 2004. 2. 5% decline of ads in newspapers, 18. 4% increase of internet advertising IT +6. 2% or even +7. 3% according to diff sources. Increase in press is however 1. 6% : +2. 4% in newspapers and 0. 3% in periodicals. TV ads +10. 4%. As a whole TV reached 56% of all adv expenditure in 2004 and press 37. 6% Forecasts 2% growth for 2005 PT FR Investments reach 1. 700 million euros, +19. 2% last 12 months. Distribution: TV 68%, Press 20%, Outdoors 7%, Radio 5%, Movies 0% Tallinn, Novtember, 2005 INTERGRAF 36
Trends in advertising SE Strong increase in late 2004 & early 2005 : 6. 7% Expectations next year are moderate 3 to 4 % increase. UK advertising expenditure picked up in 2003 and 2004. Growth areas were regional newspapers, consumer magazines, directories and outdoor & transport media. Direct Mail has levelled off after some growth. Internet related advertising expenditure has been the largest growth area in recent years. Early evidence for 2005 indicates a cut off Tallinn, Novtember, 2005 INTERGRAF 37
Trends in advertising NL Tallinn, Novtember, 2005 Market is stable, however a shift from ads in periodicals towards addressed and nonaddressed mail. INTERGRAF 38
AUSTRIA : A comparison between the first 4 months of 2005 & 2004 shows the following developments (as percentage) • Forecast for 2 nd half of 2005 : • Total +1. 5% • Print + 0. 8% • Internet / new media +6. 9% Tallinn, Novtember, 2005 INTERGRAF 39
Switzerland, Source VSD Total number of ads Commercial ads Number of pages, variation Also mentioned nnon commercial ads Tallinn, Novtember, 2005 INTERGRAF 40
Best performing advertising printed products Free sheets Direct mail Magazines + + +, but also +- - Large interest magazines Specialized magazines +++ Newspapers national regional inserts in newspapers Posters Directories Tallinn, Novtember, 2005 - + + + - + + INTERGRAF 41
Trends in employment level Belgium Tallinn, Novtember, 2005 INTERGRAF 42
Trends in employment level AT -7. 8% DK Unemployment is generally low , however a bit higher than average in printing industry FI Employment is constatntly on the decline, and it is not expected to increase even when the production is rising again. DE Drop in employment level was 6% in 2003, and 4. 5% in 2003. IT 0. 2% reduction in employment, NL 2004: decline by almost 3%. Forecast is further regression. Tallinn, Novtember, 2005 INTERGRAF 43
Trends in employment level NO Unemployment is increasing PT -1. 2% UK Continuation of decline, due to closures and redundancies CH Decreasing : 1 Q 04 35900, 2 Q 35100, 3&4 Q 34700, 1 Q 05 34600 ie 5. 4% decrease in 2004 SE Unemployment was 8% and brought down to 7% due to favourable trends. Employment declines however steadily : in 2005 some 17000 employed in commercial printing, 17700 in 2004 and 19000 in 2003. Tallinn, Novtember, 2005 INTERGRAF 44
Trends in employment level ES Number of employees 2004/2003: +3. 7% (estimate) MT Slight constant increase Tallinn, Novtember, 2005 INTERGRAF 45
Trends in utilization of production capacity generally improving in all countries ! Switzerland, Source VSD Tallinn, Novtember, 2005 INTERGRAF 46
Utilisation of Production Capacity Tallinn, Novtember, 2005 INTERGRAF 47
Trends in utilization of production capacity AT Strong variations : swinging between satisfactory or hardly satisfactory BE 1999 : 86, 7, 2000 : 86, 8, 2001 : 84, 8, 2002 : 84, 3 and 2003 : 87, 0 DK Consolidation of the industry and specialisation also means better utilization rates FI Overcapacity is a permanent situation. Large variations in the capacity utilization rate between companies FR Rate remains tight, situation of order books is fragile DE 2003 : 81. 1%, 2004 82. 3%. Tallinn, Novtember, 2005 INTERGRAF 48
Trends in utilization of production capacity IT 76% on yearly basis, ie 0. 6% increase PT Improving in 2 nd half of 2004 SE Around 80% according to sample investigation, aggregate data quote about 75%. UK Printers opinion poll suggests improvement NO Approx. 70% (stable). Scotl Unchanged excess capacity and week demand Tallinn, Novtember, 2005 INTERGRAF 49
Trends in number of bankruptcies Mergers of companies continue AT Level is stable, about 20 cases/year BE 66 companies in 2004, the highest figure since 1999. DK Still relatively low rate of bankruptcies, but strong consolidation trends towards fewer but bigger companies DE 366 bankruptcies (+/- 2. 8%) were recorded in 2003, 2004 : 306 cases ie 16% reduction and back to the level in 2002 FI About 4 -5 % of companies yearly, on average. No major changes during recent years. Tallinn, Novtember, 2005 INTERGRAF 50
Trends in foreign trade Austria 2004 : exports +4. 1%, imports +1. 8% 1 st Q 2005 : exports – 9. 7%, imports +1. 4% Belgium Tallinn, Novtember, 2005 INTERGRAF 51
Trends in foreign trade DK Exports decreased in 2003, but with big differences according to markets and products DE Exports improved substantially, + 4. 2% and imports dropped by 16. 9%, compared with 2003 exports +0. 4% and imports +11. 78%. FI The value of exports has decreased, value of imports has slightly increased. This is a slow trend since 2001. The balance of trade is still strongly positive. ES Stable. Exports 2004/2003: +0. 45% - Imports 2004/2003: +0. 72%. MT Exports reached a peak level in 2003, and was almost maintained in 2004. NL Stable, and flows are in balance. Tallinn, Novtember, 2005 INTERGRAF 52
Trends in foreign trade NO IT Import: increased by 2, 5% in volume and 5, 3% in value in 2004, increase of imports (4. 7%) and small decrease in exports (-0. 9%); balance dropped by -4. 3% Most significant drop refers to books (-8. 2%) due to relocalization, but increase of advertising material export (+5. 9%) The deterioration of export turnover was due to the decisive drop in advertising and commercial printing (-9. 5%) and to the reduction in magazines (-6. 4%), while books settled at the 2002 levels (-0. 8%); there was also a reduction in export of albums and picture books (-26. 5%), transparencies (-21. 7%), postcards (11. 9%), maps (-9. 7%) and stamps (-8%); increase in export of printed music (+20. 5%) and calendars (+11. 6%). Tallinn, Novtember, 2005 INTERGRAF 53
Trends in foreign trade PT Decline of trade activities SE Levelling of trade deficit gap. Trade deficit is down from 100 million Euro in 2002 to 60 million Euro. In 2004. Imports: 302 million Euros; Exports: 244 million Euros UK Exports and imports of printed products increased in 2004. The value of exports increased at a higher rate so that the balance of trade improved Tallinn, Novtember, 2005 INTERGRAF 54
Influence of New Media DK The market has trust in print, but however in shorter runs with a pdf-file on the net, which often in the end becomes a replacement to the printed matter FI Moves are slower than expected SE Digitalization has had an ongoing impact on the market since a couple of years. Sole web-based information is now a reality when costumers want to publicize their information. The bulk of commercial information is still in printed products but electronic services is – in line with rising advertisements on the web – growing. Tallinn, Novtember, 2005 INTERGRAF 55
Influence of New Media NL Printers offer new media services to customers, who are mostly still unaware of potential for their companies PT Growing use for all purposes UK Companies with digital printing capabilities are increasingly moving toward multiple-media output options, developing expertise in internet and email marketing techniques. 2005 British International Direct Marketing Fair featured a Digital Print Pavilion supported by the BPIF. The BPIF is developing closer relationships with the Direct Marketing Association in order to ensure that print, in particular variable data printing, is retaining its predominant position in the direct marketing sector. The principal annual London trade fair for the printing industry is ‘Digital Print World’ again emphasizing the importance of using digital printing to engage in and win the new media challenge Tallinn, Novtember, 2005 INTERGRAF 56
Developments in sales prices AT Continuation of unsatisfactory sales prices DK Generally decreasing, hard competition and more cost effective production ES Index of sales prices for printed products (NACE 22. 22) 2003: 105. 7, 2004: 108. 1, 2005 1 st Q : 110. 2 FR stable/declining and cannot reflect increases in production cost. IT Persistenly declining NL -1. 4% in 2004, -1% in 2003. Tallinn, Novtember, 2005 INTERGRAF 57
Developments in sales prices PT stable/declining UK Prices continue to be under considerable downward pressure. July 2005 printers opinion poll reports that 46% more respondents experienced price decreases in the previous quarter than price increases. Furthermore 30% more respondents expect price decreases than increases in the next quarter. CH Constantly increasing pressure Tallinn, Novtember, 2005 INTERGRAF 58
Belgium : FEBELGRA enquiry on business satisfaction among printers Tallinn, Novtember, 2005 INTERGRAF 59
Belgium : FEBELGRA enquiry on business satisfaction among printers Tallinn, Novtember, 2005 INTERGRAF 60
Developments in profitability Switzerland Balance between positive & negative answers Higher unchanged lower Tallinn, Novtember, 2005 INTERGRAF 61
Competitiveness issues DK Strong consolidation : fewer but stronger companies, and specialization in niche products, knowledge and equipment. BE Graphical companies invested more in 2004 due to the need for automation of certain production steps (in order to reduce costs) and to offer more services to clients. 2004 was a Drupa-year. The companies invested mainly in the automation of certain production steps (software, CTP, JDF, …) and in finishing equipment (online / offline). Books – China In the import figures, increased imports of books from China. books for children and art books are more often printed in China Tallinn, Novtember, 2005 INTERGRAF 62
Competitiveness issues IT Gradual deterioration of profitability indexes, which started around 1995. Continuing need of high investment in new production technology and environmental technologies cannot be transferred into sales prices PT endangered by increasing costs for taxes and petrol products SE New technology and customer preferences indicate there are incentives for the graphic industry to continue a dual path, services alongside printed products, particularly for companies with financial strength and know how. Companies with long term business contracts, strong on local and regional markets, with good control of quality and expenditure were winners in 2004. Tallinn, Novtember, 2005 INTERGRAF 63
Competitiveness / Delocalization • Delocalization of print towards CHINA to become an investigation area for Intergraf and member federations. • Request for study addressed to Directorate General Enterprise. • Aims : finding out about : actors, reasons, products etc • Total over 89 mln € in 2005, in 1995 it was nearly 12 mln, ie 86% increase over 10 years. Tallinn, Novtember, 2005 INTERGRAF 64
Source : Eurostat external trade statistics Tallinn, Novtember, 2005 INTERGRAF 65
THANK YOU FOR YOUR ATTENTION! More information: INTERGRAF Place Eugène Flagey 7 (bte 8) BE - 1050 Bruxelles Tel: +32 2 230 86 46 Fax: +32 2 231 14 64 www. intergraf. org Tallinn, Novtember, 2005 INTERGRAF 66
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