IG Design confident despite 'challenging' first half
Greeting card and giftware designer IG Design Group reported a “challenging” first half on Tuesday, with cost headwinds and supply chain limitations leading to lower-than-expected revenue and reduced year-on-year operating margins, despite strong demand.
The AIM-traded firm said revenue was up 11% year-on-year for the six months ended 30 September at $483.9m, reflecting primarily strong trading in the four months to July.
Lower operating margins resulted in adjusted profit before tax falling to $19.9m from $30.2m, however, while adjusted diluted earnings per share slid to 13.6 cents from 22 cents, which the board put down to the lower year-on-year profit performance.
Profit before tax at the half year was up 11% at $18.9m, meanwhile, driven by lower adjusting items in the period.
The board described a “robust” first-half cash management performance, with net debt widening to $58.8m from $23.2m year-on-year, which it put down to growth in the order book and an associated increase in normal seasonal working capital outflow.
IG Design declared an interim dividend of 1.25p, or 1.68 US cents, in line with its dividend policy but down from the 3p distribution it made per share at the interim point last year.
Looking ahead, the company said overall uncertainty remained over cost inflation along with raw material and transport shortages, but it did say Christmas deliveries were on track as it maintained its “first-class customer service”, while consumer demand remained strong for the balance of the year.
The group said it remained on track to fully recoup the revenues delayed from the first half in the second half, but as it had previously indicated, operating margins were expected to remain depressed throughout the rest of the 2022 financial year.
“Demand is strong across our business, and the 2022 financial year remains on track to achieve record revenues,” said chief executive officer Paul Fineman.
“Despite being constrained at the half year by extraordinary supply chain challenges, our opportunity for long-term profitable growth remains undiminished.
“As with many businesses our current priority is managing the supply shortages and extreme inflationary pressures.”
Fineman said that while in the short term the company was not seeing an overall improvement in those dynamics, it was certain that at some stage supply issues would improve, with the company set to mitigate cost pressures although it was near-impossible to predict any timing.
“We therefore continue to focus on customer service and quality of our product propositions, both of which are key to the long term success of the business.
“We are confident our strategy remains the right one in the longer term and we remain committed to the goals outlined in the growth plan announced in June this year.”
At 1254 GMT, shares in IG Design Group were up 5.04% at 245.8p.