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International Greetings trying not to say goodbye

Written by Sam Fountain

Monday, 11 February 2008

Over 1 billion feet of wrapping paper comes from the Hatfield firm each year Greetings product designer and manufacturer, International Greetings has generated a precipitous drop in its share value after reiterating a profits warning and announcing plans to restructure its manufacturing operations. The Hatfield-based company told of an expected drop in profits and turnover for the year to the end of March 2008 which caused a massive 23 per cent drop in share value to 307p, back in August. The reiteration cited a reduction in the final uptake of Christmas goods, the slowdown in consumer spending during the first quarter of the current calendar year, and much worse than expected results from the UK greetings division as reason for the cancellation of its final dividend. The statement, which has seen the firms shares drop to just 27p, said that elements contributing to UK greetings division's poor performance include manufacturing inefficiencies, additional freight costs, higher than anticipated bad debts and increased stock provisions due to reduced Christmas orders. As a result, "International Greetings' financial performance before exceptional reorganisation costs and other items, will be significantly below market expectations for the year ending 31st March 2008," the company said. "In light of the current trading position and anticipated full year outlook, the board has decided that it would be inappropriate for them to recommend a final dividend for the current financial year," it said. "Thereafter, the company would anticipate resuming paying dividends on a progressive and sustainable basis." It said that after an extensive review, the company found that its UK manufacturing facilities, together with those in Eastern Europe and China, cannot in their current form deliver acceptable profit margins, and are being restructured as a result. It added that the restructuring would lead to a rationalisation of the business, and in due course certain fixed assets will be disposed of, with a view toward the division becoming a market-led rather than volume driven business model. It said that all other businesses within the group had also been reviewed, and that it intended to focus on its core profitable activities and to exit those businesses which are either not performing to expectations or are considered not of strategic importance for the future. The reduction of in-house manufacturing in the UK greetings division will lead to a significant decrease in capital requirements and expenditure from previous levels, International Greetings said. On the upside, it said that early indications for the Christmas 2008 selling season, reflected in the March 2009 year end results, have been encouraging and that the forward order book in those unaffected areas of the business is looking strong. "Following this major review of the business, International Greetings is committed to resolving the short term difficulties in the UK greetings division, and ensuring that all other businesses within the group are clearly focussed on delivering to their maximum potential through first class product innovation and service to its customers," the company said in a statement. Set as favorite Bookmark Email This Hits: 983 Trackback(0) TrackBack URI for this entry Comments (0) Subscribe to this comment's feed Write comment This content has been locked. You can no longer post any comment.

 

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