4imprint Group PLC (LON:FOUR) saw its shares surge on Tuesday as the maker of promotional products reported a jump in profits and revenues in 2019 thanks to a strong showing from its North American business.
For the year ended 28 December, the FTSE 250 firm reported a pre-tax profit of US$54mln, 22% higher year-on-year, while revenues jumped 17% to US$860.8mln.
The increase was almost entirely a result of the group’s North American business, which saw revenues rise 17% to US$839.3mln, offsetting a 10% decline in the UK & Ireland to US$21.6mln.
As a result of the stronger performance, 4imprint hiked its total dividend for the year by 20% to US$0.84.
Looking ahead, chairman Paul Moody said the outlook for the business was “positive” and that the firm had “a clear strategy and a focused business model geared towards a market opportunity that remains highly attractive”.
He added that despite the coronavirus outbreak, the impact on the company’s supply chain so far had been “minimal, reflecting the timing of the inventory cycle of [its] domestic suppliers”, although Moody cautioned that the potential for disruption could increase if Chinese production remained restricted.
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In a note on Tuesday, analysts at 4imprint’s house broker Peel Hunt upgraded the stock to ‘add’ from ‘hold’ and retained their 3,250p price target, saying that despite the virus concerns the supply side risks were “perhaps less than feared”.
“The impact of coronavirus to date has been limited, and from the supply side, a deep supply chain and indications of resumption of Chinese manufacturing suggests more limited risk than initially feared. However, the demand side may yet prove more volatile, but at this stage we make no change to forecast”, the broker said.
4imprint shares were 17.3% higher at 3,190p in lunchtime trading.