James Cropper boosts profits despite falling paper sales

Paper manufacturer James Cropper has recorded a double digit increase in its operating profit for the first half of 2012 despite falling sales in its speciality paper business.

EBITDA rose more than 12% year-on-year, from £2.5m to £2.9m, in the six months to 29 September 2012, despite a small decline in group turnover from £39.6m to £39m.

Speciality papers total sales declined 7%, depressed by a 17% drop in export sales compared to the previous year.

Chairman Mark Cropper said that the economic uncertainty that had led to a loss of confidence in customers in export paper markets continued to trouble the company.

UK speciality paper sales remained flat although volumes shipped within the home market decreased by 3% compare with H1 2011. The company said that it was compensating for the capacity gap through winning business in new UK sectors.

Cropper was confident that speciality papers would gain further business in the UK market to offset reduced European sales.

He anticipated that recent investments and the completion of the restructuring process which will see an 8% headcount reduction by the end of the year would boost the profitability of speciality papers in 2013.

Sales from James Cropper's converting business were up 21% on last year, boosted by a recovery of sales in the lower margin sign and display sector.

Pre-tax profit before interest increased marginally to £1.2m (2011: £1.19m) but this was reduced by a negative £175,000 interest charge.

The company recorded a pension deficit of £9m, £2.6m more than the same period last year and adjustments related to this reduced pre-tax profit by £156,000.

A £256,000 benefit from the pension adjustment in the previous year meant 2012’s pre-tax profit ended up down £357,000 year-on-year (H1 2011: £1.4m; H1 2012: £1m).

Cropper added: "Despite the troubled economic climate I can be confident that there are many opportunities to build upon our global strengths and make James Cropper a more profitable enterprise in the future."

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