James Cropper profits halve after restructuring charge
By Pamela Mardle Wednesday, 27 June 2012
The paper manufacturer has recorded a 50% drop in pre-tax profit for the year to 31 March 2012 after booking an £800,000 redundancy provision for an anticipated 40 job cuts.
Group finance director John Denman said: "I am pleased to say that we do not have to make any compulsory redundancies as staff agreed to voluntary redundancies during a consultation between March and May this year."
Denman confirmed that the majority of cuts, which will happen between now and the end of the year, would be made across its Speciality Papers manufacturing division.
The Cumbria-based company expects that the redundancy programme will generate a saving of £300,000 to the end of the current financial year, and an annual £1m thereafter.
The £800,000 redundancy provision has been recognised in the company’s latest annual report, which revealed that EBITDA had decreased by 18% to £3.9m compared to 2011’s £4.7m.
Turnover for year ended 31 March 2012 was £78.2m from continued operations (excluding the discontinued The Paper Mill Shop), a 6% decline on £83.3m reported last year.
Following four years of declining income and a loss of £1.2m, retail division The Paper Mill Shop was closed at the beginning of 2011.
UK and export sales both fell 6% in 2011/2012, with export sales still representing 51% of turnover.
Speciality Papers reported a 144% increase in operating profit to £1.4m in 2012 compared with £587,000 at the close of the last financial year, an increase that was aided by the weakening of the US dollar by 3% since last year.
However, turnover was down 3% to £59.6m as the price of Northern Bleached Softwood Kraft pulp continued to fluctuate, peaking at $1,020/tonne in July 2011 before falling back to $840/tonne at the year end.
The weakening of the US dollar had a damaging impact on James Cropper’s Technical Fibre Products (TFP) and Converting business units, which reported 9% and 15% declines in operating profit to £600,000 and £200,000 respectively.
Denman said that trading within TFP was "promising" in the first quarter of the current financial year.
TFP underwent consolidation throughout 2011/2012 following a 16% decline in US sales and recessionary pressures resulting in diminishing orders and customer concerns in the US. The division began a 10-year lease on a 50,000sqft facility in New York and invested $3m to install two fibre plating lines and consolidate all US sites to one central location.
The Ohio facility closed in April 2012 and the Connecticut plant will end production once the New York site, which sources materials from the Connecticut factory, has attained accreditation to a number of customer programmes, expected for autumn 2013.
Chairman Mark Cropper said: "Although the troubles in the eurozone economy are a particular challenge, I am confident that our competitiveness will improve over the coming year as a consequence of our recent investments and restructuring process."
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