By this point, shareholders in IG Design (IGR) are used to good news. Earnings have quadrupled in the past four years, and shares in the celebrations and gift wrapping group have fared even better. Yet results for the six months to September can still be considered an early Christmas present, arriving with a surge in reported profits and a leap in the underlying operating profit margin from 6.7 to 9.3 per cent.
Several factors accounted for the swell in earnings beyond the shift to higher-margin product categories. European trading benefited from efficiency improvements, the Australian division was lifted by the successful integration of Biscay Greetings, and the UK even managed to eke out a slight uptick in profitability thanks – says management – to “new leadership team focus”.
“Lots of efficiencies have flowed through, but there are many more areas where we can improve,” added chief executive Paul Fineman, who pointed to a three- to four-year payback period for capital expenditure as a sign of more to come. Central to those hopes – and the biggest driver of earnings in the period under review – is Impact, the £56.5m US gift packaging business which IG acquired in August via a share placing.
The company lived up to its name, pushing revenue from the Americas business up by 44 per cent year on year to $132m (£104m), and papering over the dip in organic sales brought about by unfavourable shipment timings. Following the deal, the Americas looks poised to make up more than half of global revenues.
| IG DESIGN (IGR) | ||||
| ORD PRICE: | 581p | MARKET VALUE: | £455m | |
| TOUCH: | 568-576p | 12-MONTH HIGH: | 622p | LOW: 365p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 215p* | NET DEBT: | 58% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 167 | 9.5 | 10.2 | 2.0 |
| 2018 | 205 | 14.0 | 14.4 | 2.5 |
| % change | +23 | +48 | +41 | - |
| Ex-div: | 6 Dec | |||
| Payment: | 18 Jan | |||
| *Includes intangible assets of £79m, or 101p a share | ||||
