IG Design: Card maker’s cost-cutting drive starts to pay off despite profit plummet
Profit at IG Design, the world’s largest maker of greeting cards, wrapping paper and gift bags, has been slashed but the firm is now cash generative and expecting to make a comeback in the second half of the year.
As expected, group revenue fell 11 per cent in the six months to September, causing adjusted profit to plummet 62 per cent in the first half compared to the prior year period, according to a post-close trading update.
As of 30 September, 2024, though, IG Design was in a much stronger cash position than last year, with net cash of $7.4m (£5.7m), compared to net debt $15.1m after the first half of 2023.
But the London-listed company, which also specialises in Christmas crackers, is anticipating an improvement in profit in the second half of the year as it embarks on a “business simplification, efficiency and cost-saving initiatives” drive.
So far this year it has closed a Chinese manufacturing facility and performed a significant restructuring within its Americas business to cut costs.
Earlier this year, it blamed a loss in revenue on under-performance in the Americas and “continuing softness” in demand in the UK and Australia.
The company added it believes its trading results for the full year 2025 remain in line with its expectations that were downgraded last month, giving a blow to the stock price.
Brokerage Panmure Liberum said today, however, that the shares are trading “crazy low” and rated IG Design a ‘buy’.
It added that the business has “significantly changed its prospects, is now profitable throughout the year, is fundamentally cash flow generative in H1 when it never used to be and continues to execute its change strategy well despite what has been a challenging backdrop”.