Business News
IPA Economic Study Shows Higher Sales Growth, Decreased Profitability
Wednesday 12. November 2008 - IPA, The Association of Graphic Solutions Providers, has released its 2008 IPA Economic Study. The comprehensive study includes comparative financial ratios of premedia service providers within the graphic communications industry.
Among the report’s most revealing findings, companies engaged primarily in premedia versus print services generated the highest gross profit as a percent of sales (40.1 percent). Report categories include data by all respondents, repeat respondents for trending purposes, company size and sales volume, and by respondents primary services.
The report compares data for the “Profit Leaders”defined as those within the upper 25 percent as ranked by EBITDA (Earnings, Before Interest, Taxes, Depreciation, and Amortization) as a percent of sales to that of the Lower 75 percent. In addition, data is provided for all respondents. This breakdown of Profit Leaders vs. the Lower 75% is provided for all categories, providing extensive groupings for benchmarking. Of particular interest to graphic solutions providers is the section examining survey results based on three primary services provided: Prepress Services, Printing Services, and Creative/Advisory/Management Services.
Significant findings specific to this years report are:
>> Responding companies experienced a much higher sales growth than they did in the previous year6.2 percent versus 1.3 percent, yet profitability actually decreased by 1 percent. The same phenomenon held true with repeat participantswhere the same participants are compared from year to year. Repeat participants experienced a sales growth of 4.4 percent compared to .5 percent in the previous year, yet EBITDA as a percent of sales was 18.8 percent in 2007 compared to 20.9 percent in 2006.
>> The most profitable companies continue to outperform the others, reporting EBITDA as a percent of sales of 35.6 percentdown from 39.0 percent in 2006 and 37.6 percent in 2005. The most profitable companies do a better job of controlling costs across the board than do the less profitable companies.
>> Companies engaged primarily in prepress services generated the highest gross profit as a percent of sales (40.1 percent) while also incurring the highest administrative and sales expenses as a percent of sales. As a result companies primarily involved in creative/advisory/management services, had the highest net profit margin at 9.7 percent compared to 8 percent for primarily prepress services.
Participants in the study ranged from the small to medium size companies (sales under $5 million) to the larger companies (sales over $15 million). While the majority of the companies classified themselves as primarily prepress/premedia companies, 25 percent indicated that their primary service is printing and about 20 percent are primarily involved in creativity, advisory, and management services.
The 2008 IPA Economic Study along with a personalized company performance analysis was provided free to all companies that participated in the study. Price for non-participating members is $200 and $400 for non-members.