REG - IG Design Group PLC - AGM Trading Update

IG DesignAnnouncement

26/09/2024 07:00

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RNS Number : 7014F  IG Design Group PLC  26 September 2024

26 September 2024

IG Design Group Plc

('Design Group' or the 'Group')

AGM Trading Update

Ahead of today's Annual General Meeting, IG Design Group PLC announces an
update on trading for the period covering the five months ended 31 August 2024
(the "Period"), and an update on its outlook for the year ended 31 March 2025.

Overview:

·    Transformation of the Group continues

·    Overall Group revenue impacted by continuation of trends in DG
Americas

·    Remain on track to return margins to above proforma pre-pandemic
levels of at least 4.5% in FY25

·    Continued strong cash generation

·    FY25 adjusted profit expected to deliver in excess of 20%
year-on-year growth, albeit below but within 10% of previous market
expectations (believed to be $36.0m)

The trends around consumer demand and the broader retail environment remain
unchanged from the sentiment in our Full Year Results in June. Notwithstanding
this, we continue with the turnaround of the DG Americas business, reducing
the complexity that was built over successive acquisitions, and improving
margins through more simplification and better leverage of its scale.

At the time of our Full Year Results, we announced that the DG Americas
division had seen revenue decline 16%. This was mainly driven by reduced
demand for certain categories, from Everyday product categories to Seasonal
ones, as our main customers ordered more cautiously ahead of seasonal peaks,
especially Christmas 2023. In addition, we were carefully managing our credit
risk exposure, which weighed on revenues, as some of our US retail customers
gave us cause for concern. These trends have continued into the current
financial year with revenue in DG Americas declining c14% for the period.

The CEO of DG Americas left the business in July 2024, and we are actively
recruiting a successor who will complete DG Americas' transformation journey
sooner and return that business to profitable revenue growth. Until the new DG
Americas CEO has been successfully onboarded, the DG Americas top-team are
reporting directly to Paul Bal, who is now visiting the US regularly. To
facilitate this, other Board members and senior leaders are supporting certain
of Paul's responsibilities across the rest of the Group.

DG International continues to perform well and in line with the Board's
expectations, with continued growth from our key customers in continental
Europe offset by ongoing softness in the UK and Australian markets.

Overall Group revenue has declined c13% in the period compared to prior
year.  Whilst the H1 versus H2 revenue split is expected to remain similar to
the prior year, we anticipate an improvement in H2 profitability driven by the
timing of benefits from strategic initiatives and mix improvements.

Net Cash continues to be strong, and the Group has been cash positive for the
entire five month period, with cash balances well in excess of the prior year.

Outlook for the full year:

With the order book now c77% complete at this point (FY2024 equivalent: 77%),
we anticipate Group revenue to decline c5% for the full year, mainly driven by
the trends we are experiencing in DG Americas.

Notwithstanding the challenges in DG Americas, the Group's Operating Profit is
expected to grow year-on-year, and the margin is still expected to return to
above proforma pre-pandemic levels of at least 4.5%.

The Group expects to deliver in excess of 20% year-on-year adjusted profit
growth, however, as a result of the lower expected revenue, the Group now
expects results for the year to be below, but within 10% of, previous market
profit expectations and towards the lower end of the Board's profit
expectations.

The Board recognises the increased difficulties being faced in some of the
markets in which we operate and thank our teams everywhere for their
determination to deliver to their best ability in the circumstances.

On completing the first half of our year, the Board will provide another
trading update on 29 October 2024 as previously scheduled.  The publication
of the half year results is scheduled for 26 November 2024.

 

For further information, please contact:

 IG Design Group Plc                           Tel: +44 (0)1525 887310

 Paul Bal, Chief Executive Officer

 Rohan Cummings, Chief Financial Officer
 Canaccord Genuity Limited (Nomad and Broker)  Tel:  +44 (0)20 7523 8000

 Bobbie Hilliam

 Harry Pardoe
 Alma Strategic Communications                 Tel:  +44 (0)20 3405 0209

 Rebecca Sanders-Hewett                        designgroup@almastrategic.com (mailto:designgroup@almastrategic.uk)

 Sam Modlin

 Will Merison

 

 

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