International Greetings

Wrapping paper and stationery maker International Greetings (IGR) has been thoroughly refreshed and returned to profits by new management.

After considerable restructuring and by refocusing on its strongest product lines, CEO Paul Fineman was able to reverse recent losses quicker than expected to a £800,000 profit before tax and restructuring charges in the half to September. While sales slipped slightly to £93.8m, Fineman, who ascended from managing director in late 2008, says that 2010 ‘will see a return to growth, although we still have issues to resolve’.

IGR’s £101.2m debt mountain is one such concern. However, under finance director Sheryl Tye’s regime net debt was reduced by 10.6% last year and ‘will be under £60m by the year end – and we’re aiming for £30m’.

Under Fineman the company is honing in on its areas of strength, which include its strong relationships with the blue chip retailers in the UK and the US, and a licence business that comprises deals with Disney and US celebrity cook Paula Deen. ‘We also want to push our own brands more; we have a strong competitive edge in producing fashion-led design at mass market price points.’

In addition, IGR is working more with ‘value retailers’ nowadays, providing a cheaper range for certain supermarkets and ‘pound shop’ stores, which has helped even out sales seasonality. Moreover, Fineman, who says ‘we’re launching a product in January with a big take-up by a major retailer that’s not been factored into the forecasts’, thinks 'new opportunities' will make a ‘significant impact’ on operating margins.

With house broker Arden predicting 3.1p of earnings for the full year and 6.2p for 2011, the shares, which were worth over £4 less than three years ago, are getting cheaper on a medium-term view. Speculative buy.