PMP expects to slash about 20% of its debt this financial year but has also forecast reduced earnings.
The print giant cut its net debt from $143.3 million to $89.1 million in 2012-13 and has forecast a further drop to $70-75 million in 2013-14. That is expected to produce a $5 million reduction in PMP's cash interest bill.
Chief executive Peter George has made debt reduction a priority since succeeding Richard Allely in October 2012.
PMP also forecast underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $60-64 million, compared to $72.2 million in 2012-13.
[Related: PMP wins Elle magazine contract]
Headline EBITDA has been forecast to fall from $73.9 million to between $66.8 million and $70.8 million.
The headline figure will be affected by one-off adjustments due to property sale and leaseback expenses.
PMP also revealed that its capital expenditure would be less than $8 million per annum over the next two years as it had no need to acquire a new heatset press in the foreseeable future.
George said he would maintain a "strong focus on continuing to manage the business for cash", which would come from controlling costs, and reducing inventory and working capital.
He also hinted that better times may lie ahead, with "pagination levels starting to rise".
"Q1 retail conditions continue to be subdued but [we're] starting to see some early indications of improvement in consumer confidence," said George.
"However, we expect prices to remain subdued given the influence of the industry overcapacity."
[Related: Ups and downs of PMP]
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Hang on, didn’t they just take on $50m debt via a Bond offering? Weasel words at play i think. Some of us recall PMP crowing about increases in paginations in around 2005, but forgot they were locked in restrictive and cheap pricing agreements. Everything was rosy when measured in tonnes out the door but decidedly less so when they worked out how little they were getting for it. The massive reduction in capacity will undoubtedly limit their ability to participate in spot work as the market lifts. Will be an interesting one to follow and see if the cycle repeats.
I used to work for the book printing arm of PMP where our success was measured by the tonnes of paper we used. However, they didn’t acknowledge that those tonnes could have been made up of one massive reprint of a book like Harry Potter or lots and lots and lots of little print runs all for different books each with their own set up etc. – totally different profit margins.