International Greetings: U.S. Market Key To Top-Line Growth
Edison | Jun 25, 2015 02:25AM ET
Many happy returns
International Greetings (LONDON:INGR) has delivered strong growth in earnings, ended its financial year with net debt below previous estimates and returned to the dividend list a year ahead of earlier expectations. While underlying markets provide little stimulus, there remains plenty of scope for the group to grow its top line through increase in market share, particularly in the large US market, leveraging its highly efficient manufacturing production and strengths in global sourcing. The share price is now recognising some of the achievement to date, but not necessarily the ongoing opportunities.
US market key to top-line growth
Two years into its three year plan, International Greetings (IGR) has dedicated considerable capex into upgrading its manufacturing facilities in China, the Netherlands and Wales. These are all performing, at the very least, in line with targets and are driving progress on margin. Tackling the considerable opportunity in the US has been delayed by the sad death of the US CEO last year, but the new incumbent (appointed in April 2015), is already outlining the strategy to build market share within new customer categories, as well as looking at opportunities in other markets. Continuing product innovation and new product licences agreed with Walt Disney Company (NYSE:DIS) and Universal Studios should also put a shine on performance, which remains on track to meet management’s ongoing target of double-digit cumulative average growth in earnings per share. Management bandwidth has freed up post the US appointment and the finishing of the main capex projects, and acquisitions to broaden the offer in adjacent categories, or strategic deals, such as last year’s Enper purchase, are now more likely, subject to meeting stringent payback hurdles.
Leverage greatly reduced
Performance on net debt was even better than the previous ambitious target of £30m, helped by tight working capital management, particularly in the US. The newly-stated aim is to reduce average net debt from the current 4x to 2.5x by FY19. Our model shows year-end net debt reducing to £26m at end FY16 and £22.5m for FY17. The group has declared the intention to pay a 1p dividend, rising thereafter.
To Read the Entire Report Please Click on the pdf File Below
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.