IG Design Group: Party Time
Edison | Jun 28, 2017 02:57AM ET
Another strong set of results from IG Design Group (LON:INGR) show the positive impact of its strategy of investment and innovation in design and delivery. Last year’s acquisition of Lang in the US has added product and customers, while the European operations are gaining additional benefit from the growth of their clients.
A particularly strong cash performance has moved the balance sheet cash positive at the year-end, well ahead of schedule. The dividend has been raised from 2.5p in FY16 to a proposed 4.5p, with further rises on the cards underpinned by our raised FY18 and new FY19 estimates.
Europe and the US in the performance vanguard
With external sales up 31% (organic growth of 11% plus 8% from acquisition and 12% currency benefit) and EBIT up 51% (21% organic), this has clearly been a strong year. While the Lang acquisition has clearly allowed a step change in the scale of the US sales and profits (38% of FY17 revenues), the performance of the underlying business there was remarkably strong.
Revenues were up 26.6% (at constant currency) on a stable margin of 6.4%, facilitated by the prior year's investment in additional converting equipment. In Europe, revenue growth of 13.4% is in part a reflection of the strong client performance as the likes of Aldi, Lidl and Carrefour (PA:CARR) build their market share. IG Design's gifting offering has built particularly well as those customers have concentrated their supplier bases – now accounting for 25% of geographic revenues and a larger proportion of profits.
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