Ostensibly, there was little to trouble analysts in IG Design's (IGR) half-year figures, with 10 per cent like-for-like organic revenue growth at constant currencies (CC) and operating profits 11 per cent to the good on the same basis. The strength of the group's order book suggests that conditions in the global gift packaging and greeting card market remain favourable, but management notes “cost headwinds are undoubtedly stronger than ever” – perhaps prompting the markdown in the share price that followed the release to market.
Among the aforementioned “headwinds”, management cites increased paper/cardboard costs, which obviously feed through to the cost base, but initiatives are in place to mitigate any negative effects. Meanwhile, operating expenses increased by £2.8m to £25.3m, due to investment in people, rebranding and currency movements impacting overseas costs. There were also costs linked to the integration of Lang Companies Inc – the US supplier of home décor and lifestyle products acquired in July 2016.
The deal looks inspired. Lang’s revenues grew by 45 per cent to $16.2m (£12.2m), boosting overall performance in the Americas. This region was the star performer, with total sales up 18 per cent to $91.3m, against a relatively modest 4 per cent increase in the domestic UK market.
Analysts at Cenkos forecast adjusted pre-tax profits of £19.1m and diluted EPS of 20p for the year to March 2018, up from £16.3m and 18.2p in FY2017.
| IG DESIGN (IGR) | ||||
| ORD PRICE: | 390p | MARKET VALUE: | £247m | |
| TOUCH: | 389-390p | 12-MONTH HIGH: | 438p | LOW: 234p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 144p* | NET DEBT: | 74% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 146 | 7.9 | 9.7 | 1.75 |
| 2017 | 167 | 9.5 | 10.2 | 2.00 |
| % change | +14 | +20 | +5 | +14 |
| Ex-div: | 07 Dec | |||
| Payment: | 18 Jan | |||
£1 = $1.33
