G3 Group's British souvenir business faces a "significant profit downgrade" that has the NXT-listed mail operations and document manager's board trying to figure out ways to mitigate the decline.
The Auckland-based company reported its fourth quarter key operating metrics today - the lower disclosure obligations required of firms on NZX's NXT market - which showed the company's profit margins were largely in line with its targets for the year ended March 31. Those targets were increased in April when G3's recently acquired Tidy Files document management and Small Worlds UK tourist souvenir businesses generating stronger sales and wider margins than expected.
G3 said it was pleased with the "sound operating and financial performance" New Zealand and Australian document management and business mail services. However, the UK tourist collateral business faced "a significant industry wide cost increase" from a major supplier.
"The new pricing would result in a significant profit downgrade for that business unit and the directors are considering how it may be mitigated," chief executive Mark Brightwell said in a statement.
G3 reported a gross margin of 24.7 percent in the year ended March 31 and an operating margin of 22.3 percent, just short of the 24.8 percent and 22.4 percent targets, which had been 22 percent and 20.2 percent before the upgrade.
