Printing - etude de marche

This report examines the UK printing market and the industry that supports it. The market is a significant one because it serves every business sector of the UK. The industry itself is also important as it is a net contributor to the UK balance of payments. Key Note estimates that the UK market for printed products in 2005 was �13bn, an increase of 1.6% on 2004.

The UK printing industry provides products and services to the following business sectors: advertising literature: programmes, tickets, vouchers and business cards; periodicals and journals; books, brochures, leaflets, pamphlets, reports and accounts; packaging; printed labels; business forms; security printing; stationery and newspapers.

The industry experienced one of its most difficult years in 2005. Demand for printed products is growing very slowly; indeed, in some sectors it is actually falling. Printers' costs are rising � energy, paper and inks � but they have been able to pass on these higher costs in the form of higher prices to end users. Meanwhile, severe competition within the industry is another constant factor that printers have to contend with. Therefore, profitability is weak even among the top tier of printers.

The UK printing industry is fragmented, with thousands of small and medium-sized firms. Out of nearly 12,095 companies, only 3.1% have sales of more than �5m. Only four UK companies have a turnover of �400m or more. Indeed, 96.9% of the industry's companies have a turnover of less than �5m.

The issues that beset the industry remain pricing, skills shortage and keeping abreast of new technology. Given the low profitability, the level of investment in the industry is high. Another feature of the industry is its success in export markets in the face of strong competition from abroad.

There were a large number of mergers and acquisitions in 2005 and many more are expected in 2006. There is a feeling in the industry that 2006 is likely to prove a watershed, with some major restructuring taking place. The future of two very major companies, Polestar and Communisis, is unclear. The first may well merge with another, while the second is up for sale. The advent of two `superplants' (mega-sized print factories) � one of which began production in summer 2005 and the other due to open in April/May 2006 � is another factor that is likely to trigger large-scale change in the industry.

Key Note forecasts that, in 2006, the printing market will increase by around 2.1% to �13.27bn and by a further 1.9% in 2007. Thereafter, the market is likely to rise by around 2.2% to 3% a year until 2010.