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International Greetings wraps up US recovery

The recovery story is still in full swing at giftwrap maker International Greetings
December 3, 2015

Shares in giftwrap maker International Greetings (IGR) fell 4 per cent on the back of these numbers. Some shareholders are probably taking profits after the 135 per cent surge in the group's share price over the past 12 months. Thanks to earlier than expected delivery of certain Christmas product ranges, as well as a 20-basis-point improvement in gross margins to 18.2 per cent, IGR reported a 32 per cent increase in adjusted pre-tax profit to £5.2m for the half year to September.

IC TIP: Hold at 175p

Overheads were higher than expected in absolute terms, but most of that reflected ongoing investments in the US business following the appointment of Gideon Schlessinger as the new chief executive of International Greetings USA in April. Chief financial officer Anthony Lawrinson said investments to improve the company's efficiency would continue in the second half, too.

Analysts at Cenkos expect capital spending to reach £6.5m in the year to March 2017, which compares with £1.5m spent during the first six months. However, management is also mindful of the need to bring the company's leverage down. The key to juggling these two competing aims will be the conversion of as much profit into cash as possible.

Cenkos expects pre-tax profit of £10.1m for the year ending March 2016, giving EPS of 11.9p, compared with £9.2m and 11.5p in FY2015.

INTERNATIONAL GREETINGS (IGR)
ORD PRICE:175pMARKET VALUE:£103m
TOUCH:173-177p12-MONTH HIGH:185pLOW: 69p
DIVIDEND YIELD:1%PE RATIO:14
NET ASSET VALUE:105p*NET DEBT:121%

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20141123.03.50.0
20151204.96.20.8
% change+7+65+77-

Ex-div: 10 Dec

Payment: 19 Jan

*Includes intangible assets of £31.6m, or 54p a share