James Cropper has predicted that its papermaking business will turn around after announcing a pre-tax loss of 800,000 for the year to 31 March.


Lower sales and cost increases resulted in the papermaking arms profits falling from 2.57m last year to a loss of 1.73m this year, said chairman James Cropper. Group turnover from continuing operations rose by 900,000 to 54.2m.


"This is only the third time in 150 years in which a loss has been reported," said Cropper. "It was caused by exceptionally difficult trading conditions in the papermaking division."


Cropper cited soaring NBSK pulp prices and a doubling of the companys gas bill to nearly 2m as the main factors behind the loss.


"There is the prospect of some relief, as the cost of pulp has now fallen below $600 per tonne," he said. In the first two months of the year, the division has traded profitably.


A broadly based recovery plan was in place to restore papermakings profits to previous levels, according to Cropper.


The plan led to the loss of 20 jobs, mostly on a voluntary basis. Considerable scope still existed for efficiency improvements in raw material usage and working practice and these would be pursued vigorously.


"Although papermaking is a mature industry, there is considerable potential for growth in our niche markets," said Cropper.


The groups two other businesses, in technical fibre products and converting, were both performing well and the group was financially in good shape with relatively low gearing, he said.


Story by Richard Rhydderch