International Greetings

Gift-wrap, stationery, crackers and cards maker International Greetings (IG) returned to profits in the year to March following a radical restructuring.

Having lost £22.8m in the previous year, Paul Fineman, CEO, said IG needed to make some big changes. He told Growth Company Investor that he ‘wanted the company to retrieve profitability’ and so oversaw a number of restructuring initiatives that lead to a headcount reduction from 3000 to 2200 and involved the closure of its Latvian manufacturing operation.

In the wake of this restructuring bout, IG made adjusted pre-tax profits of £3m on £200m (£216m) turnover last year, whilst disposing of a portfolio of unprofitable operations including costume firm Halloween Express and luxury wrap enterprise Glitter Wrap.

Currently providing cards and stationery to major retailers and supermarkets including Tesco’s, Waitrose and Amazon.com, IG still has ambitious growth plans, having begun to supply 'value cards' to budget clothing retailer Primark and recently signed deals to make products to tie in with upcoming digital animation film Toy Story 3. Moreover, Fineman has identified growth potential aplenty for the group in emerging markets including Mexico, Chile and Brazil.

For the current year, house broker Arden is forecasting 70% growth in pre-tax profits to £5.1m, as revenues rise by 5% to £210m. Investors should also look for an improvement in earnings from 3.4p to 6.4p, leaving the shares trading on just under ten times forecast earnings.

We believe that despite falling, though still significant, debts of £49.9m, IG now represents a decent recovery punt, given the successful restructuring that has gone on.