(Alliance News) - IG Design Group PLC on Thursday said its performance in the year ended March 31 was ahead of expectations, despite troubles in its Americas division.
IG Design manufactures and design gift packaging, stationery, and craft-related products. It is based in Milton Keynes, England.
Shares in the firm plunged 13% in London on Thursday morning to 160.00 pence.
The company said expects to deliver revenue of USD890 million in the year ended March 31. This would be down 4% year-on-year on a constant currency basis, or down 8% on a reported basis.
IG Design explained that its smaller International division saw revenue growth of 10% at constant currency, compared to a revenue decline of 10% for its larger Americas division.
It explained that the decline for the Americas division results from a combination of the decision to exit its loss-making business and a lower volume across a number of categories, especially in the second half of its financial year.
All businesses, save for those operating in continental Europe, experienced year-on-year sales decline in the second-half of the year, IG Design said. This reflected the "challenging" macroeconomic and consumer environment post-Christmas 2022, the company explained, particularly in the UK.
Group operating margins are expected to be approximately 1.8%, a recovery of around 140 basis points on the previous year, IG Design said.
"This better than expected margin performance is expected to deliver a Group adjusted profit before tax of some USD9 million, which is ahead of previously communicated market expectations, reflecting continuing stronger than anticipated trading performance in continental Europe, as well as benefits from the turnaround initiatives initiated in the Americas division exceeding earlier expectations," the company explained.
However, due to recently deteriorated trading, and "very limited" pricing expectations for Christmas 2023 in the UK, the company said it is likely to incur a one-off, non-cash write-down to the historic goodwill value associated with certain businesses in that market.
This is expected to "significantly impact" the reported results for the year, IG Design said. IG Design intends to announce its full-year results on June 20.
Chair Stewart Gilliand said: "There is no doubt that the continuing uncertainty in the global retail consumer goods sector provides a challenge. However, the initiatives already underway in the Americas, coupled with the recent strategy work across all regions will position the group well to navigate these challenges and emerge stronger once the external environment becomes less challenging."
The company noted that the search for its new chief financial officer is "well advanced". It is expected to be completed "shortly".
By Heather Rydings, Alliance News senior economics reporter
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Design Group (IGR)