Greetings giant’s £23.55m pre-tax figure is ‘ahead of market expectations’
The world’s biggest greeting card, wrap and gift bag manufacturer has revealed its annual pre-tax profits will be around £23.55million ($29.5m) – much bigger than expected for IG Design Group.
The Wales-headquartered business, which also owns Tom Smith, Christmas cracker makers to the King, made the announcement on Tuesday, 30 April, in an update on its financial performance to 31 March, 2024.
CEO Paul Bal, who took the top role in April 2023 after 11 months as chief financial officer, has been trying to rebuild the profit margins which had fallen during the pandemic as the soaring costs of paper and shipping met a drop in demand.
“I am delighted with our progress in improving operational efficiency and simplifying our business,” Paul said. “Through our work we have delivered another year with significant improvement in profit and margin.
“Looking ahead, while the external environment remains uncertain, we remain confident that our strategy is the right one, and that we will achieve our aspiration to return the group to pre-Covid-19 adjusted operating profit margins by 31 March, 2025.”
Part of his plan is to exit loss-making contracts and focus instead on more profitable business at the leading designer, innovator and manufacturer across greeting cards and various celebration and creative categories, such as with American retailer Walmart, which is one of IG’s largest customers, as well as UK partnerships like the revival of the Paperchase brand through the collaboration with Tesco.
The £23.55m figure is ahead of market expectations and significantly up on the FY23 total of £7.34m ($9.2m) on revenue of £638.49m ($800m) which is a 10% reduction year-on-year.
The DG Americas division experienced a decline of around 16%, mainly in the first half of the year where the decrease was 24% due to lower volume across a number of categories but the company was pleased when revenue stabilised in the second half to settle at a 1% reduction.
While the update said there was “some softness” in the UK and Australia markets, in the DG International division this was more than offset by continued momentum across continental Europe and the results are in line with the prior year on a reported currency basis.
The board said the financial performance delivered in the year has been “ahead of expectations” and reflects its aspiration to return to pre-Covid adjusted operating profit margins of 4.5% by the end of next March.
The increase in profitability came from both divisions, with DG Americas growing 132%, or around £3.2m ($4m), and DG International growing 61%, around £9.59m ($12m)., and it expects momentum to continue into the year ahead, with more of the profit growth coming from Americas division.
The report added: “The board is pleased with the operational progress and financial performance of the group. As highlighted in our interim results, there remains caution in consumer shopping behaviour which holds down demand in certain markets and product categories.
“That said, actions taken over the past two years provide confidence in the delivery of the expectations for the year ahead, with the group on track to deliver on its margin target for 31 March, 2025.”
