It is hard to say exactly how the overall printing ink industry is faring right now. Quite a few ink manufacturers and key suppliers say that business is improving, particularly on the packaging and digital segments, but numbers from the National Association of Printing Ink Manufacturers’ (NAPIM) 2011 State of the Industry Report, presented at the recent NAPIM Annual Convention, give reason for concern.
In talking with suppliers, it seems that there has been an improvement in recent months. Resin and additive manufacturers alike said that the packaging ink business has done well even during the recession, while publication and commercial ink companies have suffered. In The Resin Report, beginning on page 18, and The Additives Market, starting on page 30, industry leaders I spoke with say there is reason for optimism, as long as the global economy cooperates. In The Packaging Ink Report, which begins on page 22, packaging ink specialists say that 2012 sales are strong.
The news is also good in China, India and the Asia-Pacific region. In my article, The Asia-Pacific Ink Market, which begins on page 26, leading ink manufacturers report that the region is enjoying strong growth, led by India and China.
However, amid this good news lies the aforementioned NAPIM 2011 State of the Industry Report. A few numbers practically scream out in this report. According to NAPIM’s survey respondents, ink sales (not including digital, textile and screen) declined in dollar value by 0.9% in 2011, with pounds falling 3.1%. Since 2004, offset inks have declined approximately 30% by volume.
Profitability of ink manufacturers is a huge concern. According to the report, ink companies’ earnings before interest and taxes, or EBIT, was -1.9%. That is shocking. Interestingly, companies with less than $50 million in sales reported an EBIT of 5.4%; companies with sales greater than $50 million recorded a -2.3% EBIT.
Return on net assets based on EBIT was -3.9% overall for the ink industry. Once again, the smaller companies fared far better: companies with sales of less than $50 million reported an average RONA of 12.8%, while larger companies had a -5.4% RONA.
The profitability of the ink industry has been severely impacted by higher raw material costs and a decline in demand in some key segments, particularly offset. Whatever the case may be, these numbers are not sustainable, and one wonders what will be next for the ink industry in the coming year.
Ink World Editor
Mixed Signals from the Printing Ink Industry
By David Savastano, Ink World Editor