Australia’s largest diversified marketing and printing company, IVE Group, has shrugged off two Covid-impacted years, released a strong full year 2022 result and outlined its growth plans with $30-$40 million set aside for further bolt-on acquisitions.
The company also pointed to the September launch of the e-commerce enabled Lasoo digital catalogue platform and plans to build the company’s packaging capabilities over the coming two years.
It is also expected to complete the relocation of its Victorian business operations by September 2022 to two key precincts – one at Sunshine and the other at Braeside – to drive further efficiencies and enhanced client service.
The Sunshine site is the base for IVE’s Victorian web offset printing operations and letterbox distribution hub, while the Braeside site, which is made up of three co-located buildings, is the base for sheetfed and digital printing, data driven communications, retail display and fulfilment and logistics.
FY22 Results
IVE Group’s full year revenue for 2022 was $759 million, up 15.6 per cent on the prior year. EBITDA was up 13.3 per cent to $96.6 million with NPAT increasing 66.1 per cent to $33.1 million.
Gross profit margin was at 46.6 per cent, compared to 48.1 per cent on the pcp which the company attributed to contractual timing differences of passing on paper price increases.
Net debt as at June 30 2022 was $76.8 million, down $60.3 million from $137.1 million at June 30, 2020. Cash at bank as at June 30 2022 was at $67 million with $35 million of senior debt repaid since August 2021.
IVE Group shareholders can also expect a 8 cent fully franked final dividend.
IVE Group’s 2022 FY capital expenditure was at $18.6 million and this included $3.7 million for the upgrade and expansion of its digital printing fleet.
IVE Group executive chairman Geoff Selig said after two Covid-impacted years, it is pleasing to deliver these results today.
“It’s fair to say that at the beginning of FY22 there was a lot of volatility and uncertainty around, particularly across supply chains, including our own. This followed two years that were heavily impacted by COVID. Albeit the company demonstrated through FY20 and FY21 its resilience and continued to deliver strong results. So we’re certainly pleased today to present our FY22 full year performance,” Selig said.
IVE Group CEO Matt Aitken declared the company ‘match-fit’ for future growth.
“These are exciting times for IVE Group – the business is match-fit,” Aitken said.
“It has great people, world class operations and a very diverse product and service offering, great operating leverage and a strong balance sheet from which to execute ongoing growth initiatives.
“We enter FY23 with a strong balance sheet having already funded a precautionary but material increase in inventories and having repaid a significant amount of debt over the past two years. We were encouraged by the uplift in revenue during FY22, and while the macroeconomic environment remains somewhat uncertain, I am optimistic about the year ahead given our demonstrated track record, business fundamentals and strong market position. My thanks to our Board and the entire IVE team for their skill and ongoing commitment throughout a year of volatility and uncertainty.”
Aitken went on to outline a number of strategic initiatives at IVE Group, including the integration of Active Display Group and AFI Branding which were acquired in November 2021 for $6.5 million.
Once these businesses are fully integrated into IVE’s existing operation by September 30 this year they are expected to contribute annual revenues of around $45 million, additional EBITDA of $6.5 million and NPAT of $4 million to the company.
The possibility of IVE purchasing some or all of Ovato, which is currently in administration, was also discussed. Selig said IVE Group continues to work in “good faith” with FTI Consulting administrators with the ACCC still to rule its approval of any acquisition.
Aitken said IVE Group continues to meet supply chain pressures adding inventory levels are currently six to eight weeks above current client commitments.
“The current inventory levels are about six to eight weeks higher than what we would normally have expected them to be over and above current client commitments,” Aitken said.
“But I feel that’s entirely appropriate heading down into our peak period of Christmas and also still given the volatility of supply chains.”
IVE Group also noted it has benefited this year from clients moving revenue onshore from Asia, particularly in the retail display sector.
Lasoo ‘go-to-market’ consumer launch
Another exciting initiative that is due to be launched to consumers in September is Lasoo, a digital catalogue business which was established in 2007 and was acquired by IVE in 2020.
Since taking the business on IVE Group has invested $4.7 million to rebuild and market test the Lasoo platform to provide it with e-commerce functionality which gives consumers the opportunity to discover, compare and purchase specials from multiple retailers on one platform in one transaction. This new platform will go live in mid-September 2022.
FY23 outlook
In terms of the FY23 outlook, IVE says it remains optimistic that revenue momentum will continue in the near term.
It has forecast an underlying EBITDA for FY23 of $105 million, excluding an expected $3.3 million after-tax loss associated with Lasoo’s consumer go-to-market campaign and team building, as well as any impact of a potential Ovato transaction.
Capital expenditure for FY23 is also expected to be $14 million.
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