IG Design (IGR) has revealed a marked step up in earnings despite rising input costs. Closure of paper and cardboard plants in Asia have led to a drop off in supply, accelerating price increases. But mitigating actions taken by the greeting card and gift packaging group have been effective, pushing adjusted operating profit up 33 per cent at constant currencies. This stands in contrast to more prosaic top-line growth – ergo unit profitability is on the rise. The net operating margin has climbed 140 basis points to 7 per cent over the year, but chief executive Paul Fineman sees further growth ahead, and is predicting it will reach 8 per cent in the next 12-24 months.
While the group has grown across all regions, the reasons for each areas’ performances differ. However, in general terms, the group has benefited from a move into higher-margin product lines such as gifting, stationery and creative play. Management plans to supplement the business with acquisitions where possible, consolidating its marketplaces and looking into related products it can cross-sell to existing customers. Capital investment came in at £9.4m, against £5.1m in FY2017.
Broker Cenkos upgraded its forecasts following the results announcement and now expects adjusted pre-tax profit of £24.4m in 2019, giving EPS of 24.9p (from £21.4m and 21.8p in 2018).
| IG DESIGN (IGR) | ||||
| ORD PRICE: | 436p | MARKET VALUE: | £279m | |
| TOUCH: | 432-444p | 12-MONTH HIGH: | 484p | LOW: 324p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 152p* | NET CASH: | £4.4m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 224 | 5.2 | 5.2 | nil |
| 2015 | 229 | 7.3 | 9.7 | 1.00 |
| 2016 | 237 | 9.9 | 12.3 | 2.50 |
| 2017 | 311 | 13.0 | 15.7 | 4.50 |
| 2018 | 328 | 19.7 | 21.4 | 6.00 |
| % change | +5 | +52 | +36 | +33 |
| Ex-div: | 4 Jul | |||
| Payment: | 18 Sep | |||
| *Includes intangible assets of £36.5m, or 57p a share | ||||
