While the NAPIM report is a snapshot of the U.S. industry, it still remains a fairly accurate reflection of the printing ink industry as a whole.
It will come as no surprise to the industry to learn that ink sales were down again in 2002. Overall, NAPIM estimated that ink sales were down 5.2 percent, and volume decreased 2.5 percent. That confirms the belief that prices fell faster than volume, which is not a good sign. In particular, the publication ink side continued its decline, with sales down 7.6 percent in 2002 and volume dropping 2.6 percent. Of the main printing processes, gravure fared the worst, with sales declining 10 percent and volume decreasing 2.7 percent.
The 2002 results were better on the packaging side. Overall, sales were down 0.7 percent from the year before, while volume declined 1 percent, with the corrugated market the hardest-hit by the economy. The more positive results make sense considering the fact that packaging market is more recession-resistant than the publication side.
What was surprisingly good news was the improvement in the earnings before income tax (EBIT) and return on net assets (RONA). In 2002, EBIT rose from 4.6 percent to 5.2 percent; RONA increased from 12.6 percent to 15.5 percent. Together, these indicate that profitability was up somewhat, primarily due to the cost containment efforts put in place by ink manufacturers.
The other piece of good news came from the fourth quarter 2002 results, in which overall printing ink volume increased 1.1 percent over the fourth quarter of 2001, with sales declining 1.5 percent. This follows a trend during the second and third quarters, which saw sales declines of less than 3 percent compared to the respective quarters for 2001. If these results are a true indication that the economy is starting to stabilize, there may be renewed hope for the future for the ink industry.