4imprint (FOUR), which sells promotional products such as pens, mugs and dongles to companies, ramped up its marketing spend by 23 per cent last half in an attempt to grow its share of the $24bn North American market. The strategy helped it grow operating profits by 27 per cent to £4.7m, in spite of currency headwinds, sending its shares up 9 per cent on results day.
In dollar terms, 4imprint’s North American operations - which account for 96 per cent of group revenues - grew organic sales and operating profits by 23 and 41 per cent respectively. That reflects increased investment in online, data and analytics-based marketing, as well as expanded circulation of its print catalogues. These initiatives attracted 87,000 new customers and boosted orders by more than a fifth to 360,000. There was an equivalent rise in business from existing customers, whose orders accounted for nearly two-thirds of the total.
Those gains may look unsustainable at first sight, but 4imprint doubled in size in the five years to 2011 and management believes it can double again by 2016. The company also derisked its legacy pension scheme by concluding a flexible early retirement offer.
In light of these results, broker WH Ireland raised its pre-tax profit and EPS forecasts by 11 per cent to £14.7m and 37.6p.
| 4IMPRINT (FOUR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 710p | MARKET VALUE: | £199m | |
| TOUCH: | 705-710p | 12-MONTH HIGH: | 739p | LOW: 530p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 51p | NET CASH: | £26.1m | |
| Half-year to 28 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 101 | 3.2 | 8.6 | 5.6 |
| 2014 | 116 | 4.4 | 11.6 | 6.2 |
| % change | +14 | +35 | +34 | +11 |
Ex-div: 13 Aug Payment: 12 Sep | ||||
