IVE delivers healthy FY2019 results

IVE Group has delivered a strong full year 2019 result with revenue at the diversified marketing services and printing company up 4.1 per cent to $724.2m and proforma EBITDA up 9.8 per cent to $80.4m despite a soft second half and margin pressure from increased global paper and pulp pricing.

IVE Group (ASX: IGL), one of the key commercial print businesses in Australia, has now completed a period of heavy investment which included the final stage of the $53m Franklin Web NSW facility and an additional $6.4m investment into continuous inkjet technology to expand its personalised print offering.

The group reported no material client losses and a number of contract extensions as momentum continues across the business with meaningful new client wins and effective cross sell.

Proforma NPATA was up 4.4 per cent to $37.5m with shareholders to receive a final dividend of 7.7 cents per share taking fully franked dividends for the full year to 16.3 cents, up 5.2 per cent.

Gross profit was $347.1m, 47.9 per cent of total revenue down from 48.7 per cent on the pcp, with IVE Group executive chairman Geoff Selig saying pulp and paper price rises, a “malaise at a macro level” from the federal election and energy costs, particularly in Victoria, had also eaten into margin at Franklin WEB while gross profit in all other areas of the business remained stable.

But despite these challenges, Selig said the financial year had been the cleanest yet for the group since its listing on the ASX in December 2015, a series of acquisitions and substantial capital expenditure on new facilities with plans underway to install a new MIS system to further streamline operations across the group.

“It would be fair to say that FY19 is the cleanest year that we have had since listing in December 2015. It’s been a good year for us to focus on a number of important initiatives across the group,” Selig said.

“If you took a financial performance snapshot of the year just gone it’s a solid performance for the year just gone with all key metrics up over last year.

“We are very pleased to have again delivered a solid result, a year that brought to a conclusion the most significant investment program the sector has seen for many years. Notwithstanding softer trading conditions in H2, revenue momentum continued throughout the year and all key operational milestones were met.

“Strong free cash flow continues to underpin an ongoing very healthy dividend yield.”

The business has also relocated its logistics and fulfillment operation in Victoria to a new 15,000 square metre facility to support revenue growth.

The group also announced a brand streamlining strategy involving ceasing to operate under its four divisional brands, Kalido, Blue Star, Pareto and IVEO, from November 2019 and instead go to market under the IVE Group name from November 2019.

Commenting on the outlook, IVE Group chief executive officer Matt Aitken, who moved into the role after the resignation of managing director Warwick Hay in August, said: “We will continue as always to be focused on delivering for our customers, and ensuring we operate as efficiently as possible to deliver an acceptable return for our shareholders.

“We have an exciting year ahead with our move to one brand in November, the continued upgrade/enhancement of our group wide MIS platforms, and a number of other important initiatives to support the ongoing strength and sustainability of the business.”

The next big investment for IVE Group will be the rollout of a MIS system which is expected to cost between $3-$4m to complete.

Selig commented on Aitken’s appointment to chief executive officer saying the change had been seamless and received exceptionally well both internally and externally.

“There is a way to do things around these types of things and we couldn’t have done it any better,” Selig said.

IVE employs 1800 staff across its operations in Australia, China, Singapore and New Zealand servicing all major sectors of the industry.

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