LONDON (Alliance News) - Grafenia PLC said Wednesday that its half-year loss widened as it was hit by non-recurring restructuring costs.
For the six months to September 30, the company's loss was GBP1.4 million compared to GBP487,000 a year prior, driven by a loss of GBP132,000 due to restructuring costs versus a gain of GBP18,000 the year prior and additional depreciation costs of GBP918,000.
The company is expanding Nettl, its retail store format, which is affecting its profits causing extra costs. However, it believes that the long-term potential of this expansion will be beneficial in the future.
"Starting Nettl of America will be a headwind to our reported operating costs in the coming half-year and into the next fiscal year. However, the opportunity is significant," Grafenia added.
Furthermore, rising costs and falling prices have affected the profit margin.
"Firstly, our input costs have increased. Like the majority of printers, we've suffered from increased pricing on paper, our biggest raw material purchase. This has been exacerbated by demand for paper pulp created by the packaging industry and the drive to move away from single-use plastics," the firm explained.
It added: "Secondly, the margin characteristics for sign production are different to litho printing. As signage becomes a larger part of our business, we would expect the percentage to change in line and move closer to 50%.
"Thirdly, despite rising costs, wholesale print prices continue to fall as competitors discount to grow market share. We monitor market pricing and take defensive action to maintain competitiveness."
Meanwhile, revenue for the period rose 23% to GBP8.3 million from GBP6.7 million.
Trading for the second half, "has been mostly positive", the company said, however, considering the political and economical background Grafenia said it remains "cautious on quantifying the outlook".
Grafenia shares were untraded at 10.55 pence each.