Printers’ Profits Up in 2015

by Dr. Ronnie H. Davis. Printing Industries of America

Printers’ profits rose modestly during the past year, according to Printing Industries of America’s (PIA) Ratio Survey, the industry standard for tracking industry financial performance. The typical printing firm’s profit as a percent of sales increased from 2.6 percent last year to 3.0 percent this year. Industry profit leaders – firms in the top 25 percent of profitability – saw their profit rates on sales remain stable at 10.3 percent, the same as last year.

The full series of Ratios volumes now are available in the PIA Bookstore, accessible at A glimpse of 2015 trends is shown here.

Tracking profit trends

From 2004 to 2015, printers participating in the Ratios averaged 2.1 percent profit on sales. This year’s 3.0 percent not only is nearly one point above the average, but also only the third year with profits on sales in the 3.0 percent or higher range. For profit leaders, the 2015 profit on sales rate of 10.3 percent ties last year with the highest rate during the last 12 years. On average, profit leaders earned 9.5 percent over the last 12 years.

Printers in the bottom 75 percent of profitability, also known as profit challengers, actually lost money in six of the last 12 years. Overall, they lost an average of 0.5 percent of sales 2004-2015. However, their profit rate of 0.6 percent this year was the highest ever for the 12-year period.

The lowest profit year for all printers, profit leaders and profit challengers came in 2010 at the end of the Great Recession as both industry sales and profitability were most impacted. This dramatically demonstrates the fact that print does best in mature economic recoveries and does worst at the bottom of recessions.

Sizable profit gap between profit leaders and profit challengers

The profit gap between profit leaders and profit challengers averaged 10 percentage points during the last dozen years – a whopping difference of $1 million in profits for a $10 million-a-year printer. The profit gap actually expanded during the Great Recession years, reaching a peak of 11.2 percentage points in 2010. In contrast, the profit gap typically recedes during economic expansions, with the smallest gap appearing in 2007 at the end of the economic expansion.

The explanation for this pattern may be that the strategic and tactical advantages that profit leaders possess are most important during challenging times. But, during better times, a rising tide does indeed lift all ships and the profit gap recedes.

Does firm size matter in financial performance?

Firm size does have an impact on profitability, as profit rates vary considerably by the size of the printing firm. All printers’ profit rates generally increase as firm size increases, except for the $10 to $18 million size category. For all printers, getting larger generally increases profitability. In contrast, however, for profit leaders, size is not as strong a predictor of profitability. The size pattern for profit leaders is that smaller and larger firms are most profitable and midsize firms less profitable. This relationship has existed for a number of years.

Major costs benchmarks

As has been the case for the last few years, the composition of costs for major expense items as a percent of sales changed very little. Total factory cost averaged 77 percent of sales for all printers. Total materials costs (paper, plates, ink, other chargeable materials and outside services) accounted for 35.8 percent of total sales. Factory payroll and factory expenses amounted to 41.2 percent of the typical printing sales dollar. Administrative and selling expenses comprised 19.4 cents of every sales dollar.

Sales and value added per employee benchmarks

During the past year, profit leaders were 10 to 18 percent more productive in terms of sales per employee or factory employee and value added per employee and factory employee. In terms of operations, this means that profit leaders have fewer employees at the same level of sales compared to all printers and, in particular, profit challengers. Correspondingly, other Ratios metrics indicate profit leaders are more capital intensive than the average printer and profit challengers. Thus, profit leaders are substituting capital for labor at a higher rate.

Print sector profit benchmarks

Profit rates always vary considerably by product specialty. Of the eight printing product specialties covered in the survey, the top profit producing segments were forms/documents, direct mail, binders and converters/label and wrapper printers. At the other end of the spectrum, the lowest profit rates were for commercial/advertising printers and magazine/periodical printers.

Benchmarking your operations

The Ratios reports can be used to evaluate a company’s performance against industry profit leaders. From this information, businesses can evaluate their strengths and weaknesses in terms of expenses, productivity, revenue sources, assets, liabilities and much more. Specific reports are available for various firm profiles by size of firm, printing process and print market segments.

Dr. Ronnie H. Davis is senior vice president and chief economist for the Center for Print Economics and Market Research, Printing Industries of America. To order the latest Ratios Volume, go to