4imprint Group plc (LON:FOUR), a direct marketer of promotional products, has announced its final results for the 52 weeks ended 30 December 2023.
Operational overview
· Continued market share gains driving very strong financial results
· Marketing activities remain productive, including further development of the brand component
· Net operating margin above 10%, reflecting stability in supply chain conditions, improvement in year-on-year gross margins and some operational leverage
· 2,090,000 total orders received in 2023 (2022: 1,860,000); 311,000 new customers acquired in the year (2022: 307,000)
· Group well financed with cash and bank deposits of $104.5m (2022: $86.8m)
· $20m project to expand capacity at the Oshkosh distribution centre underway, including planned extension of solar array
Paul Moody, Chairman said:
“The Group has made significant operational and financial progress in 2023, reflecting a clear strategy and a highly resilient business model.
Trading results in the first two months of 2024 have been in line with both the Board’s expectations and consensus forecasts. We are confident that we will continue to take market share.”
Chairman’s Statement
Performance summary
Building on the momentum generated by a healthy post-pandemic rebound that began in 2022, the Group delivered another very strong financial performance in 2023.
Group revenue for 2023 was $1.33bn, an increase of $0.19bn or 16% over 2022. Profit before tax for the year was $140.7m (2022: $103.7m), driving an increase in basic earnings per share to 377.9c, (2022: 285.6c). The business model was characteristically cash-generative, with cash and bank deposits at the end of 2023 of $104.5m (2022: $86.8m), leaving the Group well financed entering 2024.
Total orders received for the full year were up 12% over 2022, a good performance reflecting continued market share gains. These gains were made despite challenging year-on-year comparatives from April onwards and a slow-down in growth in the promotional products industry in the second half of 2023 reflecting a more cautious macroeconomic environment.
The financial dynamics within the business are strong. Considerable progress was made in gross margin percentage which improved by more than two percentage points against the prior year. Productivity of marketing spend has remained encouraging, with our headline revenue per marketing dollar KPI remaining above $8 for the full year. As trailed in last year’s Annual Report, significant incremental investment in the business was approved by the Board at the start of 2023. This investment, primarily in people, has enabled us to consolidate realised gains as well as underpinning future growth prospects. In combination, these factors resulted in an annual operating margin exceeding 10%.
Strategy
Our strategic direction is clear and has not changed. We aim to deliver market-beating organic revenue growth by increasing our share in the large but fragmented markets in which we operate.
We take a long-term view of the business and its prospects. An important aspect of this is our commitment to the further development of the brand component of our marketing, which we expect to be a key growth driver in coming years.
Equally important in ensuring the Group’s success is an unwavering commitment to the 4imprint culture, which has been crucial in allowing us to attract and retain the depth of talent necessary to underpin our growth ambitions. Our team members are essential to our success.
The Board remains committed to the Group’s strategy and business model as well as being confident in the strength of its competitive position.
Further good work has been done in pursuing innovative and appropriate ways to minimise the environmental impact of our operations. Enhanced energy saving and renewable energy initiatives have continued and valuable work has been done in calculating and understanding the full extent of our GHG Protocol Scope 3 emissions.
Significant progress has been made in expanding our Better Choices™ sustainable product initiative. More than 15,000 Better Choices™ ‘tags’ have now been applied to items included in the programme and a particular focus has been on integrating products from our own private label brands into this initiative.
Pension
In June 2023 we took a significant further step in the Group’s long-term commitment to fully de-risk its legacy defined benefit pension obligations. Through the purchase of a bulk annuity ‘buy-in’ insurance policy, we were able to eliminate inflation, interest rate and longevity risks in respect of substantially all remaining pension benefits. A cash lump sum of $4.1m was paid by way of a ‘top-up’ premium for the transaction, after which balance sheet volatility will cease and future deficit reduction contributions of around $4m per year will no longer be required.
Dividend
The Group finished 2023 in a very strong financial position, with cash and bank deposits of $104.5m (2022: $86.8m). The Board recommends a final dividend per share of 150.0c (2022: 120.0c), giving a total paid and proposed 2023 regular dividend per share of 215.0c (2022: 160.0c).
The use of the Group’s large cash balance is under regular review in accordance with the Group’s capital allocation framework and balance sheet funding guidelines.
Board
In August 2023 Charlie Brady stepped down from the Board due to a challenging health issue. Charlie joined the Board in 2015 and over his years with 4imprint made a significant contribution to the strategic development of the Group. His wit and wisdom are greatly missed by his former Board colleagues.
Outlook
The Group has made significant operational and financial progress in 2023, reflecting a clear strategy and a highly resilient business model.
Trading results in the first two months of 2024 have been in line with both the Board’s expectations and consensus forecasts. We are confident that we will continue to take market share.
Paul Moody
Chairman
12 March 2024
