Solution Dynamics moves into the black

Competitor Datamail denies suggestion of predatory pricing

Database management, imaging and marketing company Solution Dynamics earned a profit of $38,000 for the six months ended 31 December 2009, an improvement on a $11,000 loss for the same period in 2008.

The profit is SDL's first in the first half since 2006.

The turnaround comes despite a 9 percent fall in sales, from $5.57 million to $4.87 million, due to reduced operating and depreciation expenses, an interim report lodged with the New Zealand Stock Exchange says.

On its market and competition, the report says state owned enterprise and NZ Post subsidiary Datamail dominates the sector and leads the market in pricing "which at times borders on predatory".

Mike Roxburgh, marketing manager of Datamail, refutes any suggestion of predatory pricing, saying the company has reviewed its wins, mainly from tenders, and has not changed its pricing.

He says where the company is succeeding is in investing in new technology, such as two HP Indigo W7200 printers bought in December 2009.

"Yes, we've been successful in winning business and we make no apologies for that," Roxburgh says.

The rest of the industry, SDL's report says, is fragmented and making low returns. Solution Dynamics is number three.

"We have maintained a dialogue with most of the other players but everyone remains convinced they can make a go of it standalone. There is a need for rationalisation and consolidation as the traditional essential mail industry is slowly declining. We remain ready to play our part in any sensible rearrangements."

SDL reports it will continue to pursue three objectives in 2010: to develop the company's Déjar digital archiving system; expand colour imaging services; and grow electronic delivery and access services.

"Our aim has always been that cash flow from SDL Services is sufficient to fund necessary development in this [the mailhouse] and the software businesses, Dejar and Bremy. It is achieving that," the report says.

"One key area of focus for the development of SDL Services is around the use of our internal technologies like Dejar and Bremy. This strategy supports the changing face of business communications away from physical mail to the web and other media."

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