Shanghai Langhai Printing CO., Ltd.
Shlanghai——Professional Packaging Products Manufacturer

UK packaging and printing industry boosted sharply in the second quarter, but confidence in the third quarter fell!

The UK printing and print packaging industry showed stronger growth in the second quarter of 2022 as production and orders performed slightly better than expected, but a sustained recovery is expected to face more pressure in the third quarter.

 

BPIF’s latest print outlook, a quarterly study on the health of the industry, reports that while the Covid-19 pandemic has not gone away and rising global costs have created operational challenges, strong output and steady orders have kept packaging going. The printing industry posted positive growth in the second quarter. The survey found that 50% of printers managed to increase production in the second quarter of 2022, and another 36% were able to keep production steady. However, the rest did experience a decline in output levels.

 

Activity across the industry is expected to remain positive in the third quarter, although not as strong as the second quarter. 36% of companies expect output growth to increase, while 47% expect they will be able to maintain stable output levels in the third quarter. The rest expect their output levels to decline. The forecast for the third quarter is based on printers’ expectations that there will be no new sharp shocks, at least in the short term, will not stop the path to recovery for packaging printers.

 

Energy costs remain the top business concern for printing companies, again ahead of substrate costs. Energy costs were selected by 68% of respondents and substrate costs (paper, cardboard, plastic, etc.) were selected by 65% of companies.

 

BPIF says energy costs, in addition to their direct impact on printers’ energy bills, are a cause for concern as companies realise that there is a very strong link between energy costs and paper and board supply costs.

 

For the third consecutive quarter, the survey included questions to help determine the extent and composition of some potential capacity constraints. Constraints identified are supply chain issues affecting the availability or timely delivery of material inputs, shortages of skilled workers, shortages of unskilled workers, and any other issues such as machine downtime due to breakdowns, additional maintenance or delays in parts and service.

 

By far the most prevalent and significant of these restrictions has been supply chain issues, but in the latest survey, a shortage of skilled workers has been identified as the most prevalent and significant restriction. 40% of companies say this has limited their capacity, in most cases, by 5%-15%.

 

Kyle Jardine, Economist at BPIF, said: “The second corner printing industry is still recovering well this year from a production, order and industry turnover perspective. Although turnover will be offset by a significant increase in all business cost areas Exaggerated, these costs have permeated into output prices. The operating environment is expected to be tougher in the third quarter. Confidence in the quarter ahead is sluggish as costs continue to rise and capacity constraints, especially difficulties in securing sufficient labor force has declined; the situation is unlikely to improve over the summer.”

 

Jardine advises printers to be mindful that their cash flow levels remain sufficiently buffered against future cost inflation. “The risk of disruption to global supply chains remains high, so be aware of inventory levels, sources of supply and how cost pressures, pricing and household income tightening may affect demand for your products.”

 

The report also found that industry turnover in March was just under £1.3bn, 19.8% higher than March 2021 and 14.2% higher than pre-COVID-19 compared to March 2020. There was a slump in April, but then a pick-up in May. Trading is expected to strengthen in June and July, then retreat further in August, followed by some stronger gains towards the end of the year. At the same time, the vast majority of exporters are challenged by additional administration (82%), additional transport costs (69%) and duties or levies (30%).

 

Finally, the report found that in the second quarter of 2022, the number of printing and packaging companies experiencing “serious” financial distress increased. Businesses suffering “significant” financial distress decreased slightly, returning to levels similar to those in the second quarter of 2019.


Post time: Aug-19-2022