SECTOR TRENDS Exports show slight signs of recovery, the Italian domestic market is a little less static and the differences between segments are narrowing, even within a general picture of hardship and worry. The study of the overall market situation carried out by the sector Federation updates on the run of machines for print, paper&board manufacture and converting, as well as on graphics-printing, paper&board manufacturing and converting activity.
The last study of the Confindustria Federation covering the paper, graphics and print sector, comprising Acimga, Assocarta, and Assografici for creating synergies and increasing the “political” weight of the segments represented was made at the end of 2012. A study that covered a sizeable sample of companies to show orientation, results and business expectations, so as to be able to trace out a path and forecast papermakers, print and graphics concerns, converter and producers of machinery and equipment for print and converting. The fragile nature of the economy and the precariousness of the Italian political situation (to limit ourselves to two of the many factors that currently condition the concrete workings of companies) it be true to say make any trend forecasts and hence any summing up of the situation are provisory and short-lived. All the same, or perhaps because of this, the “actual everyday” of the companies offers precious information for reasoning at a “micro” level (but not too much so), showing those slight differences that might show the way.
Three shades of grey
Alessandro Nova, Professor at the Bocconi University, Milan, and curator of the study sums up the essential results of the work without mincing words: «The year that has just ended features a prevailing downturn: neither GDP nor industrial production have shown signs of a turnaround from a downward trend that has now been proceeding for many quarters. In this context, the companies in the various segments of the sector are no exception, and what is more they show equally gloomy readings for the future».
Nova then introduces some exceptions that make the overall picture less bleak. Here is the first one: «[…] what with a sizeable share of companies that complain a drop in domestic and foreign turnover, the number of concerns showing an upturn in sales has increased (and even considerably), a new feature compared to the previous studies». And secondly:«The companies that operate on foreign markets are better off, a high percent declaring a growth in turnover, while the companies catering for the domestic market are again seen to be hamstrung, even if to a lesser extent than in previous studies».
Lastly, a third interesting point: «Some differences in the market situation in the segments comprising the sector represented by the Federation even in the fourth quarter of 2012. Figures though appear to be generally down on previous studies:
– the graphics and converting machine segment has definitively confirmed how the foreign markets represented the growth element and on which the hopes of future growth during the following quarters are pinned;
– even if the performance of papermill turnover is seen to be down, fewer companies are signalling a drop in domestic turnover compared to overall sector figures. Foreign trade has though dropped;
– the difficult phase of the print and graphics sector continues, in particular on the domestic market, associated with the drop in consumption and advertising, although, differing from previous analyses, there is some sign of growth for turnover abroad;
– lastly, sales trends in the paper&board converting sector are still moderately down, in particular in Italy, and if things a going better abroad there no end to the recession is in sight.
The beginning of the year, amidst uncertainty and mobilisation
Expectations regarding the first quarter of this year are better than those of previous studies: summing things up, the general approach is still one of stability; a sizeable percentage of companies showing expectations for recovery on foreign turnover (probably partial and of a limited amount); for operators on the domestic market pessimism prevails. «The expectations for the first quarter of 2013 still show a difficult situation, especially on the domestic market – Nova concludes – but tentative signs of a possible resurgence of growth abroad are to be appreciated».
Felice Rossini, president of the Italian Paper and Graphics sector Federation, underlines the problematic aspects and invites us to take action as a sector: «Professor Nova’s concern as to the heavy downtrend that characterized 2012, mainly on the domestic market, it is also our concern. Not even in these months are signs of improvement to be seen, if not timidly and only regarding abroad, and added to the difficult economic environment – the worst since the start of the crisis – one has the confused Italian political picture that emerged from the elections, which leaves no room for facile optimism. For this reason the Federation shares the invitation of the president of Confindustria, Giorgio Squinzi, to forget vested interests, allegiances and debate, and to form a government as soon as possible and focus on the nodes of a real economy that must return to growth. In terms of the "Growth Objective " the Federation, for its part, is already at work and has identified a strategy that develops along three lines of action: the promotion of reading, the incentives for innovation and the localisation of forms of support for investments in advertising».
Wide-angled view of year-end figures
• For printing, paper and converting machine manufacturers the fourth quarter of 2012 follows the trend observed during the previous nine months. The foreign market dynamics remain positive: 41% of operators have increased both turnover and foreign orders; however things are still problematic on the domestic front: revenue is reported down by 48% of companies while orders are totally stable. Employment has remained unchanged for 69% of concerns and those who have increased and those who have decreased their level of employment balance each other out.
– The first three months of 2013 should continue to show a generally unchanged situation. There are still difficulties on the domestic market, expected to decline for 30% of concerns (both turnover and orders), yet the majority of respondents expect stability (61% for turnover and 44% for orders). Prospects for abroad continue to be better: for 32% of the companies turnover will increase and there will be a 27% increase in orders, but in any case more than half of the companies expect stability in both turnover (54%) and orders (64%). With regard to employment, 73% of companies plan to keep things as they are. Although decreasing slightly, the balance between optimists and pessimists is still positive.
• The sample of paper&board producing companies (which accounts for 65% of turnover in the industry) report hardship right up to the end 2012, however forecasted difficulties for the initial phase of this year seems to have diminished slightly. According to the survey the situation for the fourth quarter of 2012 will be worse than that expected in late September covering the same period: in both cases and with reference to both the domestic and the foreign component figures are not expected to budge from depressed levels of the previous quarter while expectations for a downturn exceed those for an upturn. Employment is indicated as stable by 91% of respondents, down for 6%, while only 3% report an improvement.
– The forecasts in the sample regarding the first quarter of 2013 are, as mentioned, less negative. Taking as reference the reduced levels of late 2012 the majority expect a stationary situation, but the balance between optimists and pessimists has now shifted in favor of the former, with an improvement in foreign sales and orders. Employment is expected to be stable for 88% of the sample, down for 9%, and up for the remaining 3%.
• After a trying first nine months of 2012 due to the prolonged slump in domestic consumption and the significant drop in advertising, indicators for graphics-print companies surveyed showed them to be still struggling, with figures down on the third quarter. For the 43% of respondents turnover and domestic orders should worsen, but about a third declare improvement or a stationary situation. On foreign sales 44% of the concerns indicate stability and 31% a decline, while for more than one company out of two foreign orders are seen to be stable (56%); against this 25% of the sample indicated a drop. Employment is declining: although stable in 71% of cases, figures are down in 24% of responses.
– In the forecasts for the first quarter of 2013 negative expectations for Italy and an improvement in expectations abroad still prevail. A full 53% of companies predict stability, but one in three is pessimistic (33%), the situation for domestic orders being much the same (48% predict stability, 33% a drop). On the foreign front expectations are better: in both turnover and orders stability-oriented companies (50%) prevail, accompanied by a 31% of optimists and a 19% of pessimists. Moderately negative expectations of employment still prevail, 71% of businesses judging a situation of stability 24% declaring a drop.
• Paper&board converting companies closed 2012 with a last quarter still negative on the domestic market, while judgments are slightly positive regarding the foreign market. In the fourth quarter of 2012 39% of respondents noted a decrease and 36% growth in domestic turnover, while with regard to domestic orders forecasts of a drop and stability are on the same footing (36%). Expectations for abroad are better: 36% of companies predict an increase in turnover and 37% reckon their situation will remain as it is, while for foreign orders normality should prevail (41%), 32% showing expectations for growth. Employment is stable in 71% of cases and down in 18% of the sample.
– Expectations for the first quarter of 2013 are of slight deterioration in both the domestic and the foreign market, while there is little to no prospect of an immediate exit of paper converting concerns from the tunnel of the recession. Judgments are generally negative concerning both domestic turnover (43% of cases show stability, 36% a drop), and domestic orders (stationary in 47% and down in 32% of instances). The difference between optimists and pessimists as to foreign sales and orders is also moderately negative (68% expecting stability and 18% a drop in figures). Employment is still forecast as dropping slightly, with 75% of companies declaring they will maintain their previous levels and 18% showing a decrease.