Weak advertising market hits Schawk

Schawk, a provider of digital imaging graphics services to the consumer products industry, has posted net sales of $42.8 million (€48.1m) for first quarter of 2002 compared to $46.0 million in 2001.

The company, which supplies high-resolution colour graphic services for the food and beverage packaging and advertising sectors, said the downturn in sales was due to the weak advertising market, which accounts for 30 per cent of its total revenues.

However, despite the decline in sales the company improved its net profits, which reached $2.7 million in the first quarter of 2002 compared with $1.4 million in the prior year first quarter, a 93 per cent increase. Operating profits in the first quarter increased by 46 per cent to $5.1 million from $3.5 million in the prior year first quarter.

David A. Schawk, president and chief executive officer, commented: "Despite the higher profitability in the quarter, we were disappointed with the level of sales, which were down 7.3 per cent from the prior year first quarter. Substantially all of the decline in revenues was from the ad agency portion of our business, which is suffering from one of the weakest ad markets in the last 20 years. There is no clear indication as to when this part of the business will improve.​

"On the packaging side of the business, the demand has improved, with most larger clients generating good volume after holding back in 2001 because of mergers and other issues. However, our smaller accounts, in general, are less active with re-designs and new promotions."​