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Yellow Pages printing plant to close

The internet has claimed another victim, with falling demand for the Yellow and White Pages has lead to the closure of a Sydney printing plant.

Printing and publishing company PMP Limited (ASX: PMP) is set to close its Chullora plant at the end of June 2013 because of falling demand for printed phone books, with the majority of employees likely to be made redundant. The Yellow Pages and White Pages will instead be printed at PMP’s plant at Moorebank. PMP said that the cost of relocation and redundancies will cost around $11.5 million.

Related: APN broadcasts another loss

The company said in a statement that the decision reflects on-going declines in orders that are being experienced by the printing industry worldwide. As consumers move onto digital media, the demand for printed material has fallen. Companies like Fairfax Media Limited (ASX: FXJ), APN News and Media Limited (ASX: APN) and News Corporation (ASX: NWS) are facing the same situation with their print newspapers.

PMP is trying to turn around its business, after its Print Australia division saw earnings before interest and tax (EBIT) fall by $16 million to $39.4 million in 2012. All of its business divisions are under attack from new sources of media dissemination. Falling ad spending means magazines are becoming thinner and sales are also declining. Printed catalogues have fallen as retailers cut costs in a tough market.

PMP’s book printing division increased orders by 60% over 2011, but produced virtually the same number of books, and is having to adapt to small ‘on-demand’ print runs. As a result of consumers changing demands, PMP has forecast that the company will need to undergo major structural change, and incur large significant costs for the next two financial years.

Foolish takeaway

As a result of the structural changes occurring in the industry, falling revenues and net losses in three of the last four years, PMP has seen its share price fall 88% since the beginning of 2008. The company certainly faces an uphill battle in future, and there’s no certainty that it will survive over the long-term.

If you only invest in one company this year, make it our “Top Stock for 2012-13.” Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool writer/analyst Mike King owns shares in Fairfax Media. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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