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RUSSIAN PRINTING INDUSTRY REVIEW: 

RUSSIAN PRINTING INDUSTRY REVIEW July, 21 2006 NPES International seminar Evgueny Boutman President of ECS Group

Market review of Russian printing enterprises: 

Market review of Russian printing enterprises Over 6500 print enterprises are currently work in Russia By the end of 2005 the division is as follows: 600 nationally state owned, 1000 locally state owned and 5000 private

Slide3: 

Out of 6500 printing enterprises: 53% (3450) small (less than 20 employees), 38 % (2450) mid-size ( 30 - 100 employees) 9% (600) large (100+ employees).

Slide4: 

According to financial data (annual turnover) the division is as follows : Small (up to $0.25M)– 50% (3250 companies) Mid-size ($0.25M-$1.0M) - 38% (2450 companies) Large (over $1.0M)– 9% (450 companies)

Slide5: 

Additional information: The printing market is adjusting to packaging market. Over 1000 specialized packaging companies and many of the above mentioned companies are involved in this segment

Printing market structure by products types: 

Printing market structure by products types Key types of products: Periodicals: newspapers, magazines, etc. Books: schoolbooks, soft and hard cover books, guides, etc. Commercials and advertising: leaflets, booklets, posters, labels, postcards, tickets, calendars, business cards, envelopes, folders, etc. Labeling: self-adhesive and dry labels Cardboard packaging.

Slide7: 

The turnover breakdown is as follows: Periodicals printing (34%) $680 million Book printing (19%) $ 380 million Commercial printing (19%) $380 million Label production (12%) $240 million Cardboard packaging (16%) $ 320 million Total Russian printing market in 2005 estimated worth $ 2 000 M (consumables and equipment $ 1100 M)

Types of printing in Russian market : 

Types of printing in Russian market Market split by types of printing is as follows: Offset printing - 60%. Flexo printing - 25%. Digital printing - 7%. Letterpress printing - 5%. Screen printing, rotogravure and other special types of printing - 3%.

Slide9: 

Comments: Offset printing - growing. Flexo printing - rapidly growing. Letterpress printing is coming down. Digital printing is slowly developing. Screen printing, rotogravure and other special types of printing are stable

The general situation in the industry: 

The general situation in the industry The manufacturing and consumption paper volume in Russia is 40 kg per capita (2005). Russia consumes 12 - 14 times less paper per capita comparing to USA, Japan or Germany.

History and trends: 

History and trends The rapid development of the printing market of Russia was in 1999 -2003. One of the reasons was financial default in 1998. And a consequently many orders were returned from abroad that caused growth of the Russian printing industry. Another reason was the necessity to upgrade the equipment installed during Soviet Era. Both production volume and investment activity were increasing. Nowadays the development is coming down. The general growth rate of printing industry is now reduced to the average growth rate of the Russian economy to 4-5% annually. The Quality of printing companies is getting better at the moment. Today managers are working under production process, cost reduction and personnel qualification. We are facing differentiation of printing companies by types of services.

Suppliers in the Russian printing market : 

Suppliers in the Russian printing market All suppliers can be split by two kinds: direct channel- from manufacturers, indirect channel - through distributors and dealers.

Key factors of success for suppliers in Russian market:: 

Volume of installed base. Brand reputation. Regional sales network. Financial conditions (pricing, payment terms, project financing etc.). Quality of technical service Delivery terms. Key factors of success for suppliers in Russian market:

ECS Holding Group : 

ECS Holding Group ECS business is distribution Revenue in CY’06 should be about $180-200M 500+ people 70+ vendors 5 regional offices in Russia and 4 in former Soviet republics GAAP accounting, ERP system, strong financial management Total credit line from vendors - $19M

ECS structure: 

ECS structure IT industry Apple PRO Apple EDU Apple RETAIL Printing & Packaging industry Printhouse Apostrof HGS Oriental Print Variant

ECS’ regional offices : 

ECS’ regional offices

ECS business structure: 

ECS business structure Apostrof – Ryobi, Dainippon Screen, Horizon, Schneider Senator, etc. Revenue forecast in ‘06–$21 M 45 employees 15 salesman in Moscow and 4 regional offices 17 service engineers including 4 regional offices 230 deals per year HGS – MAN Roland, Dainippon Screen, Wohlenberg, Steinemann, etc. Revenue forecast in ‘06 – $28M 108 employees 9 salesman in Moscow and 2 regional offices 34 service engineers including 2 regional offices 50 deals a year Printhouse – Flint Group, Lastra, Konica, etc. Revenue forecast in ‘06 – $18M 124 employees 23 salesman in Moscow and 7 regional offices 14500 deals per year

ECS business structure: 

ECS business structure Oriental Print – Indian and Chinese print machinery Revenue forecast in ‘06– $10M 35 employees 7 salesman including 2 regional offices 340 deals a year Variant – Mark Andy, Fisher & Cracker, LabelMan etc. Revenue forecast in ‘06 – $8M 44 employees 13 salesmen 14 service engineers 70 deals per year

Q & A: 

Q & A