Pre-media
Other: Schawk faces fall in earnings as clients reduce spending
Global pre-press specialist Schawk has posted a major slide in second-quarter earnings, following a decline in activity from the group's US-based advertising, retail and consumer packaging clients.
Group turnover was down marginally year-on-year, falling 3.8% to $113.3m in Q2 and 3.9% to $220.6m for the first half of 2011, as a result of a decline in advertising and retail sales.
The drop in revenues led to reduced operating leverage, which together with increased integration and restructuring expenses and a $1.8m hit resulting from Schawk's withdrawal from a union supplemental retirement and disability fund in California led to a 56% drop in operating income, to $7m.
Schawk also recorded significant shortfalls in pre-tax income, which fell 59.4% to $5.8m in Q2 and 46.4% to $10.1m in H1, and net income, down 74.9% to $4m in Q2 and 63.2% to $6.8m in H1.
President and chief executive David Schawk said: "Our second-quarter 2011 results reflected decreased activity with our advertising and retail clients primarily due to stronger retail promotional activity in the prior-year comparable period.
"In addition, during the first six months of 2011 some consumer packaged goods clients remained cautious given elevated commodity prices and sustained economic uncertainty domestically and internationally."
Schawk's performance in Europe was the only significant highlight in its first-half results, with improvements in both revenues and operating income, although this was offset by poor performance domestically (in North America) and in Asia Pacific, where increasing sales were offset by decreasing margins.
European sales to external clients rose 9.1% to $35.3m for the six months ended 30 June 2011, versus a 2.3% rise in Asia Pacific sales (to $15.4m) and a 5.8% decline in North America sales (to $189m).
And while operating income fell in North America (down 23.5% to $25.4m) and Asia Pacific (down 47% to $1.4m), European earnings soared 120.3% to $3m for the first half, although the bulk of this came in Q1 (Q2 operating income rose 8.2% to $882,000).
