IG Design swings back to full-year reported profitability

25th Jun 2024 08:46

(Sharecast News) - IG Design Group reported a successful second year in its three-year turnaround plan on Tuesday, with significant improvements in operational efficiency and business simplification.

The AIM-traded company reported full-year revenue of $800.1m - a 10% decline from the prior year's $890.3m.

Despite the revenue drop, it recorded a substantial increase in profitability, with adjusted operating profit more than doubling to $31.1m from $16.1m, and adjusted profit before tax surging to $25.9m from $9.2m.

Adjusted diluted earnings per share improved significantly to 16.3 cents, swinging from a loss of 0.2 cents in the prior year.

The firm's reported figures also showed a marked turnaround, with an operating profit of $29m compared to a loss of $12m last year, and a profit before tax of $23.8m, reversing the prior year's loss of $18.9m.

Reported diluted earnings per share were 36.6 cents, a notable recovery from the prior year's loss of 28.6 cents.

The group ended the year with net cash of $95.2m, up from $50.5m, reflecting strong working capital management.

IG Design credited its profit and margin recovery to improved performance across both DG Americas and DG International, despite challenging market conditions including subdued consumer sentiment and sea-freight volatility.

Its adjusted operating profit margin rose by 210 basis points to 3.9%, driven by positive momentum in DG International, ongoing restructuring in DG Americas, and improved sourcing practices.

While revenue declined, particularly in DG Americas during the first half of the 2024 financial year, the second half saw stabilisation.

Operationally, IG Design reported strategic advancements, including the appointment of Rohan Cummings as group chief financial officer last July, and a relaunch of the group's purpose, vision, mission and values to support its new strategy.

The establishment of an operating board and distinct forums aimed to drive a new growth-focused strategy, emphasising capabilities to win and retain business.

Looking ahead, the company said it was shifting from turnaround efforts to executing its growth strategy, which was expected to deliver sales, profit, and margin growth in the 2025 financial year.

Despite ongoing economic challenges and sea-freight volatility, the group said its strengthened position over recent years was expected to help withstand such pressures.

The closure of in-house manufacturing in China was planned for 2025.

With a robust order book covering 69% of budgeted revenues for the year, up from 62% at the same point in 2024, the board said it remained confident in achieving pre-Covid adjusted operating profit margins of 4.5% by March.

Its long-term strategy meanwhile targeted annual sales of over $900m and an adjusted operating profit margin exceeding 6% by March 2027.

"I am proud to share another year of success on the group's journey to restore its profits, margins and financial strength, whilst also building a more resilient business model," said chair Stewart Gilliland.

"The year has also seen the start of balancing our focus on the recovery journey with establishing a longer-term strategy to return the Group to sustainable growth, which is requiring a lot of consistent effort from everyone across the organisation.

"With an invigorated senior leadership across the group, our financing secured and a strengthened and stable board, the group is well-set to complete its recovery over the coming year; and embark on an exciting growth-focused strategy for the years beyond."

At 0840 BST, shares in IG Design Group were down 0.22% at 229p.

Reporting by Josh White for Sharecast.com.