UniCredit Bank Austria industry report on the printing sector:
Printing sector in Austria gaining momentum in 2021
- Printing sector set to partially recoup 2020's sales decline of 15.5% in 2021
- Sharp increase in consumer spending and advertising expenditure since March 2021 has generated additional printing orders
- Export surplus of other printed goods in 2020 indicates strong competitive position of individual printing divisions
- Printing sector remains under pressure from weak, highly saturated demand
The printing sector is set to recoup a portion of 2020's significant year-on-year decline in 2021 and 2022. In 2020, the sector's turnover fell by 15.5% in nominal terms to EUR 1.6 billion. The strong recovery in the demand for consumer goods expected over the next two years will drive a rapid improvement in the outlook for the sector. "The printing sector cannot expect recovery in the long term without some bumps along the way; after all, the challenges posed by the spread of digital media are not expected to ease. On the other hand, the strong demand for printed packaging, growing demand for printed advertising materials and rise in the use of digital printing should all continue to drive growth in printing output in the future", says UniCredit Bank Austria Economist Günter Wolf.
Sharp increase in consumer spending and advertising expenditure is generating additional printing orders
Private consumption is at the heart of the printing sector, accounting for almost the entirety of its commercial success. On the one hand, there is the household spending on leisure reading, and on the other, are printed packaging materials and advertising expenditure, which in turn serve to stimulate consumers' spending mood. "The considerable increase in consumer spending - which should further improve by at least 6% in nominal terms each year over the next two years - should ensure a healthy surge in sales in Austria in 2021, and probably also in 2022", says Wolf.
Naturally, this will result in an increased flow of advertising expenditure into digital channels. However, when compared with the significant slump of the previous year, expenditure on printed advertising materials is also set to increase by around 5% in 2021. As surveys by FOCUS Marketing show, expenditure relating to TV, radio and online advertising, as well as advertising on print, has increased sharply in Austria once again. As of March 2021, expenditure rose 14% from March to May compared with the same period the previous year. Furthermore, there was a significant increase on spending for poster advertising from April. The advertising industry will continue to grow at a heightened pace throughout 2021, according to demand expectations of advertising companies for the next few months. Recent analysis in June saw anticipated values rise above the high levels of 2019.
Economic recovery in the printing sector is not expected to strengthen until H2 2021. In the first four months of the year, printing sales rose by 1.3% compared to the previous year. Economic forecasts of companies in the printing sector have been higher than the long-term statistical averages since March 2021. In June, however, production expectations for the next few months became somewhat more cautious. What is more, in Q2 2021 the printing sector reported a capacity utilisation of just 74%, which is still below the previous ten-year average of 79% and far below the figures of higher-growth years, such as the 82% last seen in 2007 and 2010. Provided that there are no further economic setbacks, the printing sector can expect a sales increase in the range of at least 4% for the 2021 average.
Export surplus of other printed goods indicates strong competitive position of individual printing divisions
Around 20% of the books, newspapers, catalogues and other printed products sold in Austria each year are imported. In 2020, spending on imported printing and publishing products amounted to EUR 820 million, which were contrasted with exports worth EUR 457 million. The export deficit of EUR 363 million in this goods category is mainly explained by the fact that Austria is not an ideal location for book production due to its small market size. The deficit for books comes to EUR 317 million and was largely achieved in trade with Germany.
What is worth noting, however, is that 2020 saw a slight increase in exports of other printed goods, such as printed advertising materials and catalogues. The exports of this goods category rose by 2.2% to EUR 384 million, with the export surplus rising to EUR 59 million. "Even though the increase in exports of other printed goods only brought the Austrian printing sector a total sales increase of around EUR 8 million in 2020, this result is an indication of the strong competitive position of individual divisions in the sector", explains Wolf. In addition, the export balance with other printed products has experienced almost a clean sweep of improvement over the past six years.
Printing sector remains under pressure from weak, highly saturated demand
Against the backdrop of private consumption and advertising spending reducing by the greatest amount in decades, the significant slump in sales for the printing sector in 2020 was hardly surprising. However, both demand factors have lost pace in growth in recent years, with the increasing use of electronic media curbing performance. In terms of household spending on books, newspapers and other printed media, sales of traditional publishing products in Austria have risen by just 1.1% in nominal terms per year since 2008 – this figure averaged at 2% for the ten years prior. Furthermore, the advertising expenditure for print-relevant media has decreased. This expenditure is either used specifically for printing brochures, newspaper supplements or posters, or it is expenditure that influences the circulation volume of newspapers and magazines indirectly through advertising. Even as recently as ten years ago, this segment made up 65% of gross advertising expenditure in Austria, compared to just 36% in 2020.
There are no trend shifts or stronger increases in demand growth expected either. However, publishers will continue to publish mass media in print - not least because of the fact that printed advertising continues to have more influence on consumers than online advertising. Similarly, non-publishing printing companies will continue to receive orders, driven primarily by growth in online trade, which is in turn leading to increases in the consumption of flexible printed packaging and delivery boxes.
UniCredit Bank Austria Economics & Market Analysis Austria
Günter Wolf, Tel.: +43 (0)5 05 05-41954;