TIDMIGR
RNS Number : 1995Q
IG Design Group PLC
26 October 2021
26 October 2021
IG Design Group plc
("Design Group", the "Company" or the "Group")
Trading Update
Revenue growth offset by challenging cost headwinds
IG Design Group plc, one of the world's leading designers,
innovators and manufacturers of celebrations, craft, gifting,
stationery and creative play products, today issues a trading
update for the six months ended 30 September 2021.
The Group has delivered a good revenue performance in the first
half of the financial year with like-for-like revenue up 11% on the
prior year, and up 5% on proforma revenues (including CSS prior to
ownership) for the six months to 30 September 2019. These results
are driven by growth across both the Americas and International
divisions reflecting the ongoing success of the Group's 'Working
with the Winners' strategy combined with its strong and innovative
portfolio of products and brands. The Group had expected revenue
growth at the half year in excess of the levels achieved, however
this was constrained by the supply chain challenges currently being
experienced across all distribution and retail sectors. Pleasingly
the Group continues to see good demand in the second half of the
financial year and good momentum into FY23 from its customer
base.
In addition to the logistical disruption within the Company's
global supply chain, partially related to the impact of Covid-19,
the business has experienced worsening cost headwinds during the
period, with sea freight costs up significantly across all regions,
alongside raw material and labour inflation as well as supply
availability issues. The business has responded quickly to mitigate
much of the impact of these challenges through commercial
negotiation, earlier stock commitments and other initiatives, while
working with both suppliers and customers to ensure the Group
maintains its high level of customer service across all its
operations.
However, as a result of the disruption and these cost increases,
operating margins in the first half have been negatively impacted
and it is expected that the challenges will continue into the
second half of the current financial year and also into FY23,
although it remains difficult, at this time, to estimate the
impact. As such, the Group now expects FY22 full year operating
margins to be 175-225 basis points lower year on year resulting in
full year earnings being significantly below current market
expectations, with the cost and supply chain headwinds continuing
for an as yet unknown period in FY23.
At 30 September 2021 Group net debt was $59 million (30
September 2020: net debt $23 million) reflecting the normal and
expected seasonal movement as the Group increases working capital
ahead of the Christmas peak season. It also reflects the timing
impact of delayed deliveries to customers. Average leverage was
zero times in the 12-month period to 30 September 2021 (30
September 2020: 0.2x).
Paul Fineman, Group CEO, commented:
"It is more than frustrating to have to report a decline in
expected earnings at a time when demand from our customers remains
so positive, driven by the continued execution of our strategy and
our best ever portfolio of products, brands and service.
However, we are not immune to the unprecedented supply chain
issues affecting just about every sector, including the significant
increase in shipping costs, and despite our best and ongoing
efforts to mitigate the impact, these factors have affected our
margins. No one knows how long these supply issues will last and we
are taking a cautious approach to the near-term outlook, especially
in light of the recent increased Covid-19 concerns.
With our ongoing focus on providing great customer service and a
compelling product proposition, supported by our strong balance
sheet and first-class team we are better placed than many of our
peers to weather the supply chain storm and return to a combination
of both revenue and earnings growth. In the medium term, we remain
committed to the goals outlined in the Growth Plan announced in
June."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU No. 596/2014) which is part of UK law by virtue of
the European Union (withdrawal) Act 2018. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
For further information, please contact:
IG Design Group plc Tel: 0152 588
7310
Paul Fineman, Chief Executive Officer
Giles Willits, Chief Financial Officer
Canaccord Genuity Limited (Nominated Adviser Tel: 0207 523
and Broker) 8000
Bobbie Hilliam, NOMAD
Alex Aylen, Sales
Alma PR Tel: 0203 405
0205
Susie Hudson
Sam Modlin
About IG Design Group plc
IG Design Group plc, the largest consumer gift packaging
business in the world, is a designer, innovator and manufacturer of
products that help people celebrate life's special occasions.
Design Group works with more than 11,000 customers in over 80
countries throughout the UK, Europe, Australia and the USA.
Its products are found in over 210,000 retail outlets, including
several of the world's biggest retailers, for example Walmart,
Target, Amazon, Costco, Lidl and Aldi. Its brand, Tom Smith, also
holds the Royal Warrant for the supply of Christmas crackers and
Christmas wrapping paper to the Royal family. Design Group is a
diverse business operating across multiple regions, categories,
seasons and brands.
Its five major product categories are: Celebrations, Gifting,
Craft & creative play, Stationery and 'Not-for-resale'
consumables. It offers customers a full end-to-end service from
design through to distribution, offering both branded and bespoke
products from the value-focused through to the higher-margin ends
of the market.
The Company was admitted to the Alternative Investment Market of
the London Stock Exchange in 1995 under the name 'International
Greetings plc' and rebranded to IG Design Group plc in 2016. For
further information please visit www.thedesigngroup.com.
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END
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October 26, 2021 02:00 ET (06:00 GMT)
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