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IG Design Group PLC on Tuesday posted an annual revenue rise but delivered a sharp profit decline as supply chain issues hit margins.
The consumer gift packaging company, however, expects a ‘slight’ operating margin for the new year as it passes on cost inflation to customers.
Shares in the company were 14% higher at 77.85 pence each in London on Tuesday morning.
Bedfordshire, England-based IG Design posted revenue of $965.1 million in the year ended March 31, up 11% from $873.2 million. Pretax profit, however, slumped 85% to $2.2 million from $14.7 million.
Cost of sales increased 17% to $842.9 million, while selling expenses were 10% higher at $48.3 million.
‘A challenging year saw margins and earnings significantly reduced by unprecedented supply chain cost increases and freight availability,’ IG Design said.
‘The cost environment remains challenging but where possible cost inflation is being passed through in pricing for customers, resulting in a slight operating margin improvement being expected for FY2023.’
Its adjusted operating margin tumbled to 0.4% from 4.3%.
IG Design decided against a final dividend. Its payout for the year totals 1.68 cents as a result, down 86% from 11.81 cents. It had paid a final dividend of 7.92 cents in the prior year. It does ‘not expect to be in a position’ to pay a dividend in financial 2023.
‘Looking ahead, macroeconomic challenges are expected to continue in the new financial year bringing further uncertainty. However, the board are encouraged by the ongoing strength of the group's customer relationships which has delivered an increased orderbook at over 71%, compared to 60% in the prior year. Operating margins are forecast to improve gradually over the year, particularly in DG Americas,’ IG Design said.
‘However, these gains will be offset by higher finance charges resulting from increased borrowing costs following the recent facility amendment and the increased average debt to support the higher working capital required to deliver the financial 2023 seasonal orderbook.’
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