IG Design Group has delivered a strong set of interim results, in line with the guidance given in its August and October trading updates. Reported revenue and adjusted operating both rose by 21% in the period, along with a further reduction in net debt. The interim dividend has been raised as a consequence by 20%. The group is making good progress on mitigating both the US-China trade tariff headwinds and ongoing Brexit uncertainties. Combined with good visibility on its forward order book into peak season, the group remains on track to meet full year market expectations.
The group delivered a strong set of interim results, notwithstanding the challenges of Brexit and US-China tariffs, where mitigation measures have been and continue to be actively implemented. Revenue and adjusted operating profits both rose by 21% to £248.4m and £23.6m respectively, and by 18% on a constant currency basis. Adjusted PBT was up 14% to £21.5m, with adjusted fully diluted EPS up by 2% to 20.1p (- with the differential in growth rate reflecting the timing of the Impact acquisition). Aggregate cash flow was similar to last year, with the reduced net debt position therefore primarily reflecting the better opening net cash position. The interim dividend rises 20% to 3.0p.
Adjusted operating profit rose by 27% in America, benefitting from the Impact acquisition in August 2018. Europe performed strongly with 13% profit growth, with the UK’s profit rising by 9%, each resulting in operating margin expansion of around 100bps. As previously guided, results in Australia fell back, partly due to the group’s conscious decision to move away from some retail customers, whose performance has been volatile. The group’s overall adjusted operating margin was flat at 9.5%.
The group delivered sales growth in all four of its core product categories. The strongest performance came in Stationery & Creative play with growth of 44%, an area identified for growth within the group’s strategic plans.
In light of the group’s indication that it is on course to meet expectations for the full year, we leave our forecasts unchanged. The group will release a trading update in January 2020.