Promotional products company 4imprint (FOUR) increased full-year guidance for revenues and operating profit ending 1 January 2023 following an upbeat trading update.

The encouraging start to the new financial year continued through April, resulting in ‘very strong’ financial performance putting the company on track to achieving its long-held goal of generating $1 billion of annual revenues.

Shareholders took note and pushed the shares up 14% to £27.90 on Friday.



WELL ABOVE MARKET EXPECTATIONS

Total orders, primarily in the US, are running 11% above pre-pandemic levels for the period from January to April. Meanwhile, average order values were 14% higher, resulting in overall demand revenue 27% above the same comparative.

The company now anticipates full-year revenues to be above the upper range of analysts’ forecasts and ‘well above’ the consensus.

Before today’s unscheduled trading update, the median forecast, was for revenues to increase 16.2% to $915 million. This implies a roughly 10% beat to estimates.

Volume gains, greater productivity of the reconfigured marketing portfolio, ‘relatively stable’ gross margins and operational gearing benefits are anticipated to push full-year operating profit above the highest market forecast.

Operational gearing refers to the mix of fixed and variable costs. Companies with a higher proportion of fixed to variable costs see operating margin benefits as a bigger proportion of revenues turn into profit.

CONFIDENT DESPITE UNCERTAIN BACKDROP

The company said the first four months of trading in 2022 have given the board increased confidence in the group’s strategy, business model and competitive position.

The board is ‘cognisant’ of a broad range of economic factors which may impact the group during the rest of the year. Forward expectations take into account the current visibility it has on these factors.

Factors include further Covid-19 variants, supply chain disruption, increased product costs, labour inflation and availability, and the possibility of a recession.

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Issue Date: 06 May 2022