22 December 2019 Business

IG Group anticipates Happy Christmas

Demand for gift wrap, licensed products, crackers and sustainable products is helping drive sales and profits for printed celebratory products.

IG Design Group, the business that was once known as International Greetings, has posted a double digital rise in revenue for its first six months.

The company is among the largest producers of gift wrap globally, supplies stationery and gifting materials through a network of retail customers including Walmart in the US and Aldi in the UK. There is a broad move towards environmentally friendly products, including fully recyclable Tom Smith Christmas crackers and stationery produced from recycled materials, where the UK is at the forefront.

The 21% increase to £248.4 million (£205.2 million) is attributed in part to a first full year contribution from Impact Innovations Inc. The company notes strong growth across Europe, the UK and US – despite the impact of US-China tariffs. These have been imposed on gift wrap coming from China, starting at 10% and then increasing to 25% across a number of its product areas.

Investment in what will be the group’s largest and most efficient printing press and mean that it can supply US customers with gift wrap produced in the US. This will be installed in Memphis where the company is consolidating manufacturing. Overall Walmart remains the group’s largest customer, accounting for 20% of revenue. In the US sales rose 40% to $183.8 million ($131.6 million).

The company notes that “we are looking to broaden our US manufacturing portfolio across paper products other than gift war, as well as further diversifying our supply chain and increasing volumes from our established non China sources of supply”.

The company has a factory in China producing wrapping paper on a Uteco at Guizhou, supplying everyday and seasonal gift wrap across the group.

This is already happening in the UK where a second ‘not for sale’ paper bag making machine is in the process of being commissioned at Hengoed, South Wales, which already has two Uteco flexo lines. Sales in the period dipped to £58.3 million (£60.6 million) reflecting changes in customer buying patterns ahead of the anticipated Halloween Brexit. Efficiency improvements yielded an increase in operating profit to £5.4 million (£4.9 million).

Its licensing portfolio increased with new deals for Harry Potter, Frozen 2, Peppa Pig and Toy Story 4. Its forward order book will bring the company back on track for the full year results.

In mainland Europe, investment in a new printing press in the Netherlands, (supplier unspecified but there is a CI Uteco already) has improved production efficiencies and created capacity that can be used for the rest of the group if needed. It has printed 157 million square metres of wrap, 8 million square metres ahead of the same point last year. A fully automated production line from converting to packing will come on stream in April next year.