Coronavirus has not been kind to greetings card firm IG Design (IGR:AIM), but shares in the world’s largest consumer packaging business rallied 8.8% to 452.5p on Monday.

This followed the news it expects to achieve higher first-half revenue and adjusted profit, though management remain understandably cautious over the full-year outlook due the ongoing Covid-19 pandemic.


A diverse business operating across multiple regions, product categories and brands, IG Design’s wares span everything from gift packaging and greetings cards to stationery and design-led giftware.

Customers include several of the world’s biggest retailers including Walmart, Target, Amazon, Costco, Lidl and Aldi. Its Tom Smith brand also holds the Royal Warrant for the supply of Christmas crackers and Christmas wrapping paper to the Royal family.

For the six months to 30 September 2020, IG Design expects to deliver a 40% year-on-year revenue rise to $435 million thanks to a $149 million boost from CSS Industries, the £89.7 million acquisition which doubled the size of its footprint in the US.

Robust growth reflected better-than-expected performances across both of IG Design’s divisions; Americas, which includes its DG Americas and CSS segments, and international - previously UK, Europe and Australia.


Stripping out CSS, group revenues were down 8.3% due to the impact of Covid-19, particularly in the first quarter, although the second quarter showed ‘a strong recovery’.

CSS’ revenues in the first half were marginally down year-on-year as a result of the impact of Covid-19 in the first quarter, however, second quarter sales ended up on the same period in the prior year, said IG Design.

It now expects to post increased adjusted pre-tax profits for the first half thanks to the first time inclusion of CSS’ results, a focus on costs and with CSS delivering synergy savings ahead of schedule. IG Design also assured customer orders are ‘now in excess of 80% of the full year revenue forecasts for the year with strong ongoing momentum in Everyday business particularly in the Americas’.


‘The board note that performance in the first half of the financial year is ahead of management expectations but it remains cautious in relation to the full-year outlook, particularly in the context of Covid-19,’ warned IG Design, though the company also reported a significant year-on-year reduction in net debt to $23.2 million compared to $106.1 million in the prior year.

IG Design expects to report average leverage for the 2021 financial year below 0.8 times adjusted EBITDA. ‘This very strong performance reflects effective cash management across the group during the first half of the year with the team remaining focused on all aspects of working capital including inventory which was lower than last year (proforma), and reduced receivable balances reflecting the focus on managing credit risk and collections.’


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Issue Date: 19 Oct 2020