LONDON (ShareCast) - (Sharecast News) - Craft, stationery and giftware company IG Design reported an 8% rise in interim group revenue on Wednesday, to $521.2m, with both of its divisions - DG Americas and DG International - performing ahead of last year, as it lifted its full-year expectations.
The AIM-traded firm said that reflected an acceleration of orders, as customers looked to de-risk supply chains, as well as catch-up pricing.

It reported improved profits and margin recovery across both of the divisions, with group adjusted operating profit up 35% year-on-year in the six months ended 30 September to $30.5m.

The company's margin expanded 120 basis points to 5.9%, reflecting the cost savings it had achieved.

IG Design said it operated "well within" its banking covenants in the first half, with working capital requirements "tightly managed" and net debt lower-than-expected through the period.

Net debt at the end of the half-year totalled $73.7m, widening from $58.8m a year earlier.

On the operational front, the group noted the appointment of Paul Bal as its chief executive officer from 1 April, adding that it made "good progress" with the turnaround of DG Americas, recruiting a new CEO for the division.

In line with the board's previous guidance, the firm declared no dividend for the first half.

Looking ahead, IG Design said it had a "strong" order book for the full year, which at the end of October was at 93% of budgeted revenues, indicating customer relationships had been sustained amid "strong ongoing demand" for its products.

The cost environment remained challenging, but where possible, the firm said cost inflation was being mitigated, resulting in an operating margin improvement expected in the 2023 financial year.

Improved working capital and cash performance was expected to mitigate the impact of higher interest base rates, while the group was aiming to complete a full refinancing in the second half, with work on that having started.

The firm said it saw an acceleration of customer orders related to Christmas trade during the first half, leading the board to conclude that there would be a "strong" first-half weighting to the results for the 12 months to 31 March.

IG Design said it also saw stronger trading in certain 'everyday' categories than previously expected.

Due to that, the board said it believed results for the full year would be ahead of expectations, delivering a "small" full-year adjusted profit before tax.

As it previously said, the directors were "cautious" on the outlook due to uncertainties over to the current macroeconomic environment.

With the senior team being reassembled and a turnaround launched, the IG Design board said it would soon start developing a "growth-focussed" strategy.

Risk around deteriorating consumer sentiment in some markets, meanwhile, meant the board remained "cautious" as to the outlook beyond the current financial year.

"Our strong performance during this period has undoubtedly benefited from customers seeking to avoid last year's supply chain issues by ordering earlier, but also from recognising our high level of service and commitment to them," said interim executive chair Stewart Gilliland.

"Pleasingly, the restructuring and simplification of the DG Americas business is progressing well.

"The turnaround of the group has commenced and is expected to now gather momentum following the recently announced senior leadership appointments."

Looking forward, Gilliland said the development of a growth-focused strategy alongside the establishment of a "more resilient" business model would benefit shareholders.

"While the challenging external backdrop and the uncertain impact of sustained cost inflation on consumer sentiment in some markets does temper our optimism notwithstanding the strong start to this year, the group has once again proved that it has extremely strong relationships with its customers and there is ongoing demand for our products."

At 0819 GMT, shares in IG Design Group were up 7.02% at 122p.

Reporting by Josh White for Sharecast.com.

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