IVE Group (ASX:IGL) executives highlighted margin expansion, strong cash generation, and progress on major consolidation and growth projects during the company’s first-half FY26 results webinar, while acknowledging revenue softness in its catalogs and publishing operations.
First-half financial performance
Chief Financial Officer Darren Dunkley reported revenue of AUD 476.5 million, down 6.2% versus the prior corresponding period, including about AUD 5 million of acquisition revenue. Management said the decline was mainly driven by softer revenue in catalogs and publishing, which had been foreshadowed at the company’s November AGM.
- EBITDA increased 1.8%, with EBITDA margin rising to 15.8% from 14.6%.
- EBIT decreased 3.3%, partly due to higher AASB 16 depreciation associated with the new Dandenong lease. Pre-AASB 16 depreciation was flat year over year.
- NPAT was AUD 28.4 million; on a pre-AASB 16 basis, NPAT was described as in line with the prior period.
- Material gross margin (MGM) improved to 50.7% from 48.5%, with management citing improved buying power and changes in business mix.
Non-operating items totaled AUD 5.8 million pre-tax, including a AUD 3.4 million Lasoo operating loss (in line with budget and the prior period), AUD 2.3 million of restructuring costs (primarily related to the Dandenong relocation and Sydney “super site”), and AUD 1.4 million of acquisition costs, partially offset by a AUD 1.4 million net profit on sale of property and fixed assets.
Cash flow, balance sheet, and shareholder returns
Management emphasized the company’s cash generation, with operating cash conversion to EBITDA of 84%. IVE declared a fully franked interim dividend of 9.5 cents per share, described as stable on the prior period and consistent with guidance.
Net debt increased to AUD 172.3 million, reflecting acquisition funding, seasonal working capital, and elevated capital expenditure tied to growth initiatives. Dunkley said gearing was broadly in line with expectations, at about 1.5x pre-AASB 16 EBITDA (or 1.2x post-AASB 16 EBITDA). He also noted that acquisition consideration was paid late in the half, with earnings expected to be reflected mainly in the second half and beyond.
The company increased its senior debt facility in December by AUD 80 million to AUD 330 million, leaving AUD 106 million undrawn at the end of December. In Q&A, management said there are no penalties for paying down net debt and described the current period as a “high point” for net debt given seasonality and project spending. Dunkley also disclosed H1 pre-AASB 16 interest expense of AUD 4.7 million, down from AUD 5.7 million in the prior period, while the AASB lease-related impact rose to AUD 3.2 million from AUD 2.7 million.
Operational initiatives: consolidation, Kemps Creek, and compliance
Managing Director Matt Aitken said IVE is six months into its five-year strategy to 2030 and noted that the company’s EBITDA margin is now above 15% and net debt remains below two times, aligned to its target of around 1.5 times.
On logistics and site initiatives, the company said its Victorian 3PL expansion concluded in the first half, with Dandenong South operational ahead of schedule and expected to be about 80% full with recent new business due to begin delivering in the second half. Management also said preparations are underway to relocate the JacPak business into the Braeside facility in the second half and to in-source raw materials and finished goods requirements into Dandenong South.
In New South Wales, Aitken said the Kemps Creek “super site” build is on track, supported by major new clients expected to come online during calendar 2026. The Sydney super site project is nearing completion, with construction finished and internal fit-out underway, including installation of new presses and finishing equipment to support packaging expansion. The company expects relocations to commence in April, with all legacy sites exited by financial year-end. Aitken said the site should deliver financial and operational benefits into FY27, including mitigation of AUD 3.1 million of additional rent the company would have faced by staying in existing sites.
Management also referenced work underway to prepare for AASB S2 climate-related financial disclosure obligations to be reported at 30 June 2026, describing it as an ongoing cost burden, particularly relative to competitors that are not listed.
Business mix: catalog softness, events momentum, and acquisitions
Executives repeatedly pointed to softness in catalogs and publishing, with some clients reducing pagination and volumes. In Q&A, Aitken said Officeworks informed IVE in Q1 it would step away from letterbox catalog distribution, which would flow into the second half. He also cited reductions from the two smaller supermarkets, offset by increases from the two larger supermarkets.
IVE presented research it said quantifies the impact of letterbox catalog distribution, using external data providers including retailers and one of the Big Four banks. Aitken said stores with letterbox catalogs outperformed those with no catalogs or in-store catalogs only, citing:
- 2.5% uplift in scanned sales through checkout/counter
- 3% increase in foot traffic
- Growth in new and lapsed customers and higher average spend among existing shoppers
He said the research has been well received and cited Coles and Bunnings as examples of retailers that have reentered the channel and/or increased volume. However, he cautioned he would not suggest all volume lost in the first half would return in the second half, and he quantified the revenue impact discussed as “more on the AUD 30 million” level.
Management also highlighted events as an emerging standalone value proposition, pointing to work on major events and a multi-year partnership with Tennis Australia, including the Australian Open. Aitken said Tennis Australia spent between AUD 3.5 million and AUD 4 million with IVE for the 2026 Australian Open project. The company also discussed licensing agreements for merchandise and apparel with Football Australia, Rugby Australia, the NFL (ahead of planned games in Australia from 2026 onward), and the AFC Women’s Asia Cup.
On acquisitions, Aitken said all three first-half acquisitions were performing well and trading in line with expectations. He provided additional detail on the Daily Press acquisition, completed in late December, for total consideration of up to AUD 35 million. He stated Daily Press has AUD 23 million in revenue and AUD 5.5 million in earnings, with about AUD 1 million in synergies expected once fully integrated through 2026. IVE paid AUD 25 million upfront, with up to AUD 10 million deferred over 24 months subject to performance hurdles. Aitken said Daily Press adds depth in social and performance marketing and includes a SaaS marketing platform called Indie, which the company expects to launch in coming months.
Outlook and guidance
For the remainder of FY26, management guided to capital expenditure of about AUD 45 million net of proceeds and said net debt at 30 June 2026 is expected to be 1.5x or below 1.5x pre-AASB 16 (less than 1.2x post-AASB 16). The company reiterated expectations to pay an annual dividend of AUD 0.18 per share, fully franked, and said it intends to return to a dividend payout ratio of 55%–65% of underlying earnings from FY27.
IVE guided to underlying EBITDA of around AUD 50 million (excluding the favorable impact of first-half acquisitions), or about AUD 52.5 million on a pre-AASB 16 basis, compared with AUD 51 million in FY25.
Management also said it intends to reinstate its on-market buyback for the next 12 months, after acquiring and cancelling about 1.7 million shares over the prior 12 months, using buybacks opportunistically if the board views the share price as undervalued.
About IVE Group (ASX:IGL)
IVE Group Limited engages in the marketing business in Australia. The company provides conceptual and creative design across print, mobile, and interactive media; and personalized communications, including marketing automation, marketing mail, publication mail, e-communications, and multi-channel solutions. It also prints and distributes catalogues, magazines, marketing, and corporate communications materials and stationery; and manufactures point-of-sale display material and large format banners for retail applications.
