Communisis wins clients and sets out to reduce costs

The new contracts will more than offset the loss of a direct mail contract with HSBC earlier this month.

Andy Blundell, chief executive of Leeds-based Communisis, said the new contracts will add some £30m to annual sales.

This compares to the £7m impact caused by the loss of the HSBC direct mail account.

Communisis is particularly encouraged by the new £10m a year contract with household products giant Procter & Gamble.

“This new contract will take us into Europe,” said Mr Blundell. “Some European markets are a lot less developed than the UK, so it’s very interesting for us.”

He added that in theory there is no geographical limit to Communisis’ operations.

“A number of our customers operate in Asia, America, Africa, why shouldn’t we go out there if the infrastructure is there?”

Analyst Michael Parkinson at Brewin Dolphin said: “A key feature of this contract is that Communisis is working not only in the UK but also with P&G in Austria, Germany, Italy and Switzerland.

“We believe this is particularly exciting as it illustrates the potential for Communisis to expand its relationships with key clients to overseas geographies.”

Communisis also announced a number of cost saving moves at a one off cost of £2.8m, which will deliver reduced costs in 2012 and fund investment in new higher margin activities.

The group is to close its Eastcote and Rickmansworth offices and transfer the activities to Newcastle and London.

It will also vacate its head office in Stourton, Leeds, and relocate group functions to the main Leeds direct mail operating site in Crossgates.

“We are continuing to transform the Leeds manufacturing business. We are investing in high speed colour digital, we’re leading the charge,” said Mr Blundell.

In the half year to June 30, the group reported a pre-tax profit of £2.9m, up from £1.8m the previous year. The interim dividend has been raised by 16 per cent to 0.5p.

“We’re getting more interest in the dividend from our investor base. It’s about longer term confidence into 2012 and 2013, we’ve upgraded our expectations for those years,” said Mr Blundell.

He welcomed the news that the Payments Council has decided not to abolish cheques in 2018. Cheques make up 10 per cent of Communisis’ sales.

“Our cheques operation is a great little business.We’ve had this guillotine removed with the news about 2018. It’s a great business and a good cash generator,” said Mr Blundell.