IG Design (IGR) transformed its business with the acquisition of Impact Innovations in August last year, doubling the size of its US business to account for 60 per cent of the group’s sales. More than a year later the logic of that decision is clear – the division delivered 40 per cent topline growth to $184m (£143m). Management said organic growth contributed around 4 per cent to this.
The group operates a factory in China, creating difficulties for its US business as tariffs were introduced and escalated. This is expected to affect performance in the current financial year, but management is in the process of installing its largest and most efficient printing press yet in Memphis, Tennessee. This will allow for giftwrap to be manufactured more efficiently and in-country, avoiding tariffs in the financial year to March 2021. It is now looking at broadening its manufacturing base in the US.
Sales in the UK business slipped 4 per cent in the period, which management attributed to the timing of shipments, as customers prepared for the previous Brexit date of October 31st. This is expected to right itself in the second half.
Broker Berenberg is forecasting pre-tax profits of £36m for the full year, giving EPS of 31.7p, up from £30m and 29.3p in 2019.
| IG DESIGN (IGR) | ||||
| ORD PRICE: | 643p | MARKET VALUE: | £ 505.4m | |
| TOUCH: | 640-646p | 12-MONTH HIGH: | 662p | LOW: 505p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 228p* | NET DEBT**: | 47% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 205 | 14.0 | 14.1 | 2.50 |
| 2019 | 248 | 17.1 | 16.0 | 3.00 |
| % change | +21 | +22 | +13 | +20 |
| Ex-div: | 5 Dec | |||
| Payment: | 17 Jan | |||
| *Includes intangible assets of £86.6m, or 110p a share **Excludes lease liabilities of £40.3m | ||||
