Not today, maybe tomorrow

FROM THE FEDERATION 2011’s fourth quarter slows down, and not much more is expected from the first quarter of 2012. The paper and printing industry Federation provides updates on the (diverse) dynamics of printing, paper production and converting machinery, paper and board production, printing and paper converting.
 

Alessandro Nova of Bocconi University, editor of the ongoing study promoted by the paper/printing Federation, sums up the analysis of the data provided by concerns in the following way: «In recent months, industrial production and Italy’s GDP have come to a halt, due primarily to a drop in consumption. Business studies relating to the last quarter of 2011 confirm this, and the expectations for the following quarter are, for the most part, based on assumptions of either regression or consolidation of production levels and not of market recovery. Furthermore - and this comes as no surprise - where there is growth, it is attributed mostly to the growth of foreign markets, while the domestic market continues to meet weak demand, which may only recover with the easing of macroeconomic maneuvering to alleviate the deficit and stabilize debt».

Moreover, the gaps of divergence between individual sectors have continued to widen during the last quarter. «In the printing and converting machinery sector, the various factors in turnover are tending to stabilize, with an obvious exception in the foreign market, which has performed, as usual, brilliantly. The situation is quite different for the paper industry, which, compared to other components of the industry, has recorded a much heavier reduction in turnover, both on the domestic and on the foreign market. Also, there is a growing number of pessimists in the printing industry, where a wide discrepancy between strong performers and weak ones has been recorded, while the paper converting sector has proved, in the end, to be in less positive circumstances than in the past, although characterized predominantly by stability in the concern’s responses».

What we need
Overall, in the fourth quarter of 2011, 40% of concerns surveyed reported a drop in domestic turnover, while 31% reported stability; 25% of concerns, on the other hand, recorded an increase in orders from abroad, and 38% reported no change. 86% of the total excluded the possibility of workforce adjustments.
Starting from the first quarter of 2012, reduction or stability is projected for domestic orders and turnover levels; overall, there are more expectations for shrinkage than for growth, with less unfavorable progress for foreign markets. «The 2012 projections - Nova comments - are determined by the uncertainty of the domestic market, added to the recessive dynamic of macroeconomic variables in the Italian economy; there is less pessimism regarding foreign demand, due to the higher growth rates of other economies».

To Rossini, president of the Federation, goes the task of appealing to government institutions. «Our study also makes clear the stalemate of the economy, especially in Italy, during the last quarter of 2011 and the first quarter of 2012, and evidences the legitimate fears of repercussions on our target sectors. Therefore, the implementation of an integrated, shared and effective plan for rebooting the Italian economy has become even more urgent. We cannot therefore but repeat our request for measures aiming, on one hand, to sustain demand, and on the other, to improve supply, starting with a removal of taxes on purchases of books, magazine subscriptions and press agency services, as well as tax credits for investments made by the concerns of the sector, the acquisition of used paper for printing books and newspapers and services industrialization and innovation projects; concern’s technological updating efforts».

The Council of Ministers - Rossini continues - also needs to step up its commitment to liberalizing energy, which at this point is a source of unsustainable costs, as well as trucking. Furthermore, given that most growth is now found abroad, it is important that internationalization is fostered by implementing a new, streamlined ICE as soon as possible».

The data, sector by sector
Printing, paper production and converting machinery builders continue, also during the last three months of 2011, to experience growth abroad: exports grew for 43% of concerns, against 24% who report a drop. No changes were found for domestic turnover: both concerns reporting growth and those reporting shrinkage remain at 22%; on the other hand, domestic orders have dropped for one third of concerns. Employment remains stable.
Expectations for the first quarter of 2012 are for a net worsening of the domestic market, both in terms of turnover (no concern expects an increase) and of orders (22% pessimistic, 9% optimistic). For 19% of concerns, a drop is also expected for turnover from abroad, which is expected to increase by only 14% of operators. On the other hand, there are high hopes for orders from abroad, for which optimists (24%) outnumber pessimists (9%). As for employment, 86% of concerns will not alter the number of employees, 9% are planning to downsize, and the remaining 5% will hire new personnel.

The sample of concerns producing paper and board (65% of the sector’s domestic turnover) also confirms that in late 2011 the overall outlook is characterized by a rapid decline of the international economy, and expresses disappointing projections for the first quarter of the current year as well.
In particular, regarding the fourth quarter of 2011, the negative assessments predominate over the positive ones concerning all the indicators in question. Domestic turnover is reported to have dropped by 65% of respondents, while the same response was given for turnover abroad by 44% of the sample, while 31% report stability.
The situation is the same for demand, given the further worsening compared to the final data of late September 2011: 46% of the sample indicate dropping domestic orders, against 27% reporting stability or improvement; negative feelings are less overwhelming with regard to the foreign markets (36% of respondents, against 31% positive). Emlpoyment is considered stable by 97% of respondents, down by 3%.
Regarding the first quarter of 2012, concerns expect to stabilize at July-December 2011 levels, and, also in this case, the pessimists outnumber the optimists, to a greater extent regarding domestic indicators, both turnover and orders. Employment is projected to remain stable by 80% of the sample, while 17% expect it to drop and 3% expect it to grow.

Printing concerns who participate in the study showed signs of weakness in the fourth quarter of 2011 by all indicators, due to weakening domestic consumption and the troubles of the publishing industry. Here are some figures: domestic turnover shrunk for 38% of concerns, but improved for another 38%; in terms of domestic orders, things went worse for 47% of cases; assessments of turnover abroad also worsened (37% shrinkage, 44% stable) and, most of all, assessments of orders from abroad, where an analogous percentage (44%) of concerns signals a shrinkage and stability. Employment also slightly regressed, reported as stable by 86% of concerns and dropping for 9%.

For the first quarter of 2012, expectations worsened further, especially for Italy: in terms of domestic turnover, nearly half of concerns are pessimistic (48%), while 43% are oriented toward stability, and for domestic orders 52% of concerns expect shrinkage. Less negative feelings are provoked by the foreign market: a majority of concerns expect stability (63%), compared to 31% who are pessimistic; the expectations for orders are similar, which will remain stable according to 56% of respondents, while 38% foresee a drop. Employment projections have slightly worsened, with 14% expecting reductions and 86% foreseeing stability.

Paper converters ended 2011 with some blemishes, while the foreign market appears to be holding. In the fourth quarter of the last year, 30% of interviewees report a drop in turnover, while 45% saw it remain stable. Similar assessments were made for domestic orders (35% saw a drop, 50% stability), while expectations are better for the foreign market: in terms of turnover, 31% of concerns foresee an increase, and 44% expect things to remain steady, while for orders abroad, projections are for worsening (31%) and normality (44%), with employment stable in 80% of cases.
For the first quarter of 2012, the domestic market is expected to retract, while the foreign market should somewhat improve. Opinions are thus negative both for domestic turnover (35% shrinkage against 55% stability) and domestic orders (35% shrinkage and 60% stability). The balance of optimists and pessimists, on the other hand, is positive concerning turnover abroad (31% think it should grow, against 56% expecting stability), as well as orders abroad (31% improvement against 50% stagnation). Employment is expected to slightly increase, with 85% of concerns projecting the same levels and 10% expecting to increase their workforce.