New deals give £20m boost to hopes for expansion

The Leeds-based group is pulling in new business with its offer of a one-stop shop for all direct mail and digital marketing needs.

Yesterday Communisis announced it has won a new contract with household products giant Procter & Gamble to deliver a multi-country loyalty scheme.

Communisis’s chief executive Andy Blundell said the new loyalty scheme, which will be rolled out next year, will target households which are high users of P&G goods.

The new contracts with Boots and Northern Rock are both for print management supply chain deals.

The Boots contract will benefit Communisis’s Leeds-based direct mail operation, as will aspects of the P&G loyalty scheme.

“The message is we’re getting on and delivering on the strategy,” said Mr Blundell.

“We have got an attractive proposition. We offer clients everything in one place – data, creative, campaign management and all forms of multi-channel output including digital, direct mail and statement billing.”

In a trading update for the three months to September 30, Communisis said it is on track to meet full year expectations.

Analysts are predicting operating profits of £9.4m for the year to December 31, up from £7.8m in 2010.

Referring to its direct marketing campaigns, Mr Blundell said: “We think we can craft the bullet more effectively than anyone else and we can also target the bullet better than anyone else.”

He added that customers such as P&G are drawn to Communisis because it has a good track record and a long term future.

“One of P&G’s criteria was to work with people who are of scale. They are serious about the partnership rather than spot buying,” he said.

In addition to winning new accounts, Communisis is expanding key accounts such as Barclaycard, which is outsourcing more work to the Leeds-based printer.

Communisis is pushing the adoption of colour digital printing and has spent £5m on two T300 printers, the only two of their kind in the UK.

The printers are built for highly personalised mass communications.

“The T300 produces at high speed and ultra definition,” said Mr Blundell.

“It’s bespoke and personalised. With a direct mail communication to 100,000 people, each could be different.”

Communisis said it is very pleased with progress on the BBC Television Licensing contract, which it secured as a result of buying Orchestra Bristol.

Communises recently told employees at the Bristol site of its plans to transfer the fulfilment of all these contracts to its facilities in Liverpool, Manchester and Leeds.

It has entered into consultations regarding the potential closure of the Bristol operation by early 2012.

This could result in an additional exceptional restructuring charge of approximately £900,000 in the second half of 2011 and deliver annual profit improvements in excess of £900,000 in 2012.

The group said the partnership with Equifax is helping it to broaden its offer, with five new marketing services products now being launched.

Communisis announced plans last year to split the business into two divisions – Intelligence Driven Communications (IDC) and Specialist Production and Sourcing (SPS).

Yesterday it said the combination of IDC and SPS is proving resilient and puts the group in a strong position to capture new business.

Earlier this year Communisis signed up Virgin Media and Speedy Hire as new clients. It said the new contracts would more than offset the loss of a direct mail contract with HSBC in July.

Communisis’s £10m a year contract with household products giant Procter & Gamble has opened up new opportunities for the group.

“This contract takes 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?”

Cost savings drive helps grow profits

Communisis is making 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.

It is closing its Eastcote and Rickmansworth offices and transferring the activities to Newcastle and London.

“We are continuing to transform the Leeds manufacturing business,” said Communisis’s chief executive Andy Blundell.

“We are investing in high speed colour digital, we’re leading the charge.”

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.