IG Design warns on profits, shares slide
By Michele Maatouk
Date: Thursday 26 Sep 2024
(Sharecast News) - IG Design slid on Thursday after the stationery product manufacturer warned on profits amid ongoing challenges at its DG Americas division.
At the full-year results in June, IG Design reported a 16% drop in revenue for the DG Americas division. It said this was driven mainly by reduced demand for certain categories, from Everyday product categories to Seasonal ones, as its main customers ordered more cautiously ahead of seasonal peaks, especially Christmas 2023.
"In addition, we were carefully managing our credit risk exposure, which weighed on revenues, as some of our US retail customers gave us cause for concern," it said.
These trends have continued into the current financial year, with revenue in DG Americas down around 14% for the five months to the end of August, and leaving overall revenue around 13% lower than the same period a year earlier.
IG said that with the order book now around 77% complete, it expects group revenue to fall around 5% for the full year, mainly driven by the trends seen in DG Americas.
"Notwithstanding the challenges in DG Americas, the group's Operating Profit is expected to grow year-on-year, and the margin is still expected to return to above proforma pre-pandemic levels of at least 4.5%," it said.
"The group expects to deliver in excess of 20% year-on-year adjusted profit growth, however, as a result of the lower expected revenue, the group now expects results for the year to be below, but within 10% of, previous market profit expectations and towards the lower end of the board's profit expectations."
At 1250 BST, the shares were down 25% at 127.88p.
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