Shares in Oakhill lost 8 per cent yesterday as the printing group reported a 44 per cent drop in operating profits last year, hit by competitive markets and continuing downward pressure on prices.
The company said revenues were down by 3 per cent to €32.8 million but profits fell more sharply, to €1.37 million from €2.45 million as margins dropped.
The company believes the downward pressure on prices seen last year will accelerate during 2006. In its books and journals business, it is facing sourcing from the Far East and supplier rationalisation, both of which are forcing prices down.
Its managed services division, which offers card and print-based products and services, has also seen downward price pressure and is facing the problem of replacing sales in declining product sectors with new emerging products that have lower unit sales values.
The share price closed one cent lower at €0.11. The company said revenue in the early part of 2006 was broadly in line with 2005 but price pressures were forcing margins down. However, it expects investments made last year to start to take effect.
"This being the case, the overall targets for 2006 remain similar to 2005," Oakhill said.
The company has invested to reduce its production costs and develop new products and services to increase revenue and replace declining products.
"The production cost base has already seen some benefit from these investments in 2005. The introduction and growth of new products is a slower process, but we expect to see some positive impact during 2006," Oakhill said.
