Paper and graphics: prospects

The fourth quarter of 2013 and the first quarter of 2014 saw an improvement in the economic situation, GDP dynamics and industrial production. The results of the latest study by the Italian paper-graphics sector federation, that represents print-graphics and paper&board processing and converting machines; paper&board production; print-graphics; paper&board processing and converting, are encouraging.

On the basis of the results surveyed from sector companies, Professore Alessandro Nova of Milan’s Bocconi University will be proposing the key figures of the latest paper and print-graphics federation balance: «In a nutshell, the Federation market survey once again is seen to closely follow the performance of the Italian economic system, where encouraging signs of improvement of the economic situation are to be seen, also confirmed by the figures on the performance of the GDP and industrial production». Hence, the turnaround trend of the cycle of the Italian economy has now been progressively confirmed - the economist comments - with economic variables now seen to be on the up. And he adds: «in this context one needs to understand to what measure the Italian system and the machine, paper, print-graphics and converting segments will manage to take advantage of the hoped-for recovery of domestic demand and the opportunities offered by the international market».
On his part Paolo Culicchi, president of the Federation, drew attention to the need for measures to relaunch the sector as a whole: greater deductability of expenditure for purchasing books, initiatives to get the advertising market going again (printed materials having dropped by 21.2% in 2013), support for the manufacturing industry, solving some crucial critical points, such as the reduction in energy costs and the promotion of energy efficiency.

The general picture
The economic balance for the fourth quarter of 2013 seems to reflect the improvements in the market variables even if, as traditionally happens, each of the segments examined has its own dynamics that differ somewhat from each other.
The paper sector, along with paper&board processing and converting, shows the best performance on the Italian domestic market, while print-graphics and converting machines enjoy a substantial flow of orders from abroad. Of the segments analysed, overall print-graphics put in a negative performances, attributable to a decline in international trade and the downtrend in Italian domestic demand.
All told, 41% of the companies interviewed declared that domestic turnover had increased, while 35% described their situation as stable. As far as the foreign market is concerned, 30% of companies indicated a rise in turnover, 48% declaring their situation as stable, reflecting the different dynamics of domestic and foreign demand within the various segments.
Professore Nova states on this count:«The expectations of companies for the first quarter of 2014 remain substantially prudent, even if the sensation of a turnaround, experienced over several quarters, appears to be consolidating, once again confirming a more optimistic vision of the foreign market, but also highlighting some instances of balancing up».
Looking at the segments, in the paper&board processing and converting and print-graphics and converting machine sector, the market is expected to put in a positive performance in the first quarter of 2014, while prospects are less bright for the print-graphics sector first and foremost and the paper sector to a lesser degree. Al told 57% say domestic demand is table, while the pessimists balance the optimists. Expectations are more favourable on the foreign market, with the total of opinions declaring either growth or stability standing at 85%.

Broad angled view of the single segments
For print-graphics, paper&board processing and converting machine builders the fourth quarter of 2013 also drew to a close with domestic turnover shown to be totally stable; domestic orders also show overriding stability declared by 50% of concerns, in the remaining 50% those that increased turnover prevail over those who indicate a drop. Turnover for abroad put in a better performance, declared on the increase by 48% of concerns; orders are also seen to be on the increase (40%) or stable (40%). A good 77% of companies declared their employment situation is unchanged.
For the first three months of 2014, most operators expect stability on both the domestic and foreign markets regarding turnover (domestic: 54%, abroad 48% orders) and for orders (domestic: 46%, abroad: 48%). As far as employment is concerned, 81% of companies say their situation will remain unchanged.

The paper&board producing concerns (that accounts for over 67% of total sector turnover) show a composite picture overall though showing improvements both in the current market situation and in future forecasts set against the figures from the preceding survey.
The balances for the fourth quarter of 2013 show an on average better run of domestic figures than that registered in the end-of-September study. In terms of turnover, half the sample in fact indicate that domestic turnover has improved on the previous quarter, while only 15% of interviewees indicated a drop.
On the level of demand, domestic orders are shown to be improving for 36% of the sample, and dropping for 12%.
Turnover as well as orders for abroad are also looking up, though in a less evident fashion, where indications of stability regarding levels reached in the preceding period exceed 50% and the balance between improvements and downturns is limited (10% for turnover, 3% for orders). Employment is stable for 97% of the interviewees, down for the remaining 3%.
As ever cautious the picture described by the forecasts for the first quarter for the year at hand, where, what is more, while things are expected to remain stable at end of 2013 levels, all indicators appear to be on the up, though with some limited downturns (affecting domestic turnover and foreign and domestic orders), with foreign turnover totally on the up.
Expectations regarding employment show the same situation as that found in the market balance for the last period in 2013 (stable for 97% of the sample, down for the remaining 3%).
For the print-graphics concerns taking part in the survey, the first nine months of 2013 saw the reiteration of the persistent difficulties both in the domestic component of demand, due to the crisis in advertising and household expenditure, as well as in foreign demand. Indication regarding the fourth quarter of 2013 appear to exclude an improvement, albeit the area of pessimism appears more restricted. While 41% of interviewees indicate a reduced domestic turnover, this is countered by a 35% who are optimistic. Over 40% also forecast a downturn in domestic consumption (47%), with 29% of companies tending towards stability. In terms of foreign turnover and orders one company out of two (50%) describes their situation as stable, but with one company in three declaring a drop. Employment figures have dipped slightly, even though the situation is announced as stable for 70% of cases, indications are down in 18% of responses.

Forecasts for the first quarter of 2014, set against the fourth quarter of 2013, still see moderately negative expectations of the print-graphic sample for Italy and a slight improvement in expectations for abroad. In terms of domestic turnover and orders, in most cases stability should prevail (59%) while pessimistic assumptions (23%) only slightly outstrip optimistic ones (18%). Abroad expectations are slightly better in terms of turnover: stability prevails (58%) with a 25% optimistic, while expectations as regards orders are somewhat shrouded, with a 58% of responses giving a stationary situation and 25% pessimistic.
Expectations regarding employment are slightly down, with 82% judging the situation as stable and 12% indicating a drop.

The paper&board processing and converting companies, after a third quarter of 2013 on the up - this also due to a recovery of sector exports, going against the drop seen in the first six months of the year due to the fall in industrial production and consumption - also confirm the optimistic indications for the fourth quarter of 2013, regarding both the Italian and foreign markets. Regarding the third quarter of 2013, one company out of two (50%) indicates a growth in domestic turnover and domestic orders, while 44% denoted stability of the same. At any rate positive, even if to a lesser extent, the figures for the turnover engendered by foreign markets: 46% of companies estimate stability, 39% show growth, while regarding foreign orders the balance appears to be more even,  31% rate an increase, set against 46% that judge things will stay the same. Employment is stable in 82% of cases, and down in 12% of cases.
Compared to the fourth quarter of the year previous, the expectations on the first quarter of 2014 of the sample of paper&board processing and converting companies show a more contained optimism, both for Italy and for abroad. The judgments are positive overall both for Italian domestic turnover (38% declare stability and 37% an increase), as well as domestic orders (44% declare an increase and 31% no change). The balance between optimists and pessimists is also moderately in favor of the former for foreign turnover (46% showing stability, 31% an increase), while the pessimists prevail slightly regarding foreign orders (46% are stable and 31% show a drop). Employment still shows a slight downturn, with 50% of companies declaring they will maintain previous levels and 31% declaring there will be a drop.