REG - IG Design Group PLC - Post Close Trading Update

IG DesignAnnouncement

20/04/2023 07:00

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RNS Number : 8261W  IG Design Group PLC  20 April 2023

20 April 2023

IG Design Group Plc

('Design Group' or the 'Group')

Post Close Trading Update

 

IG Design Group plc, one of the world's leading designers, innovators and
manufacturers of Gift Packaging, Celebrations, Craft & Creative Play,
Stationery, Gifting and related product categories, provides an update on its
financial performance for the year ended 31 March 2023, which is ahead of
expectation.

 

The Group expects to deliver revenue for the year of approximately $890
million, down 4% year-on-year at constant currency (c. 8% on a reported
basis). At constant currency, the Group's smaller International division grew
approximately 10%, with increased revenue across all businesses, with
particular strength seen in continental Europe. The Group's larger Americas
division experienced a drop of approximately 10%, resulting from a combination
of the strategic decision to exit loss-making business, and lower volume
across a number of categories, especially in the second half of the financial
year. All businesses, save for those operating in continental Europe
experienced year-on-year sales decline in the second-half of the year. This
reflected the challenging macroeconomic and consumer environment
post-Christmas 2022, particularly so in the United Kingdom.

 

Group operating margins are expected to be approximately 1.8%, a recovery of
some 140 basis points on the previous year. This better than expected margin
performance is expected to deliver a Group adjusted profit before tax of some
$9m, which is ahead of previously communicated market expectations, reflecting
continuing stronger than anticipated trading performance in continental
Europe, as well as benefits from the turnaround initiatives initiated in the
Americas division exceeding earlier expectations.

 

Due to the recently deteriorated trading, and very limited pricing
expectations for Christmas 2023 in the United Kingdom, the Group is likely to
incur a one-off, non-cash write-down to the historic goodwill value associated
with certain businesses in that market. The Directors expect this to
significantly impact the reported results for the year.

 

Financial position

 

The Group closed the year with a net cash balance of some $50 million, a
significant year-on-year increase, reflecting stronger working capital
management despite inflationary impacts.

 

The Group is at an advanced stage with its re-financing, with new facilities
that should run to spring-2026. It is expected that this will be completed in
the near term.

 

Board appointments

 

Following the recent appointment of Paul Bal as Group CEO, the search for a
new Group CFO is well advanced. It is expected that this will be completed
shortly.

 

Outlook

 

The financial performance as set out above is consistent with management's
aspiration to restore pre-Covid operating profit margins by the end of FY25.
This year's delivery is ahead of the Board's expectations, and reflects
significant efforts in the Americas division to restore profitability, and to
grow revenue and extend margins elsewhere.

 

The Board expects FY24 to present demand and pricing challenges given
widespread consumer caution. Nevertheless, it expects to make progress towards
its FY25 aspiration.  With margin recovery underway, management is developing
a growth-focused strategy that will also better leverage the Group's scale and
capabilities to further underpin delivery.

 

The Group intends to announce its full year results on 20 June 2023.

 

Stewart Gilliland, Chair, commented:

 

"On behalf of the Board, I would like to thank all of our colleagues across
the Group for their dedication and strong efforts to restore the Group to
profitability, especially so in the Americas.

 

There is no doubt that the continuing uncertainty in the global retail
consumer goods sector provides a challenge. However, the initiatives already
underway in the Americas, coupled with the recent strategy work across all
regions will position the Group well to navigate these challenges and emerge
stronger once the external environment becomes less challenging."

 

For further information, please contact:

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

 Stewart Gilliland, Chair

 Paul Bal, CEO & CFO
 Canaccord Genuity Limited (Nomad and Broker)  Tel:  +44 (0)20 7523 8000

 Bobbie Hilliam

 Alma PR                                       Tel:  +44 (0)20 3405 0209

 Sam Modlin                                    designgroup@almapr.co.uk (mailto:designgroup@almapr.co.uk)

 Josh Royston

 Pippa Crabtree

 

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310.Upon the publication
of this announcement, this inside information is now considered to be in the
public domain.

 

 

 

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