James Cropper profits and revenue up

By Richard Stuart-Turner, Wednesday 16 November 2016

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Cumbrian papermaker James Cropper has posted strong revenue and profit growth in its half-year results.

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James Cropper Paper has seen growing demand from both new and existing customers

For the six-month period ending 1 October 2016, revenue grew by 7.8% to £45.4m, up from £42.1m for the same period last year.

Pre-tax profit, excluding IAS 19 pension adjustments, jumped by 41.2% from £1.7m in 2015 to £2.4m. After IAS adjustments it was £2m, up 100% from £1m last year.

James Cropper Paper contributed £35.3m of the sales, up by 4.7% from £33.7m. This was said to be driven by growing demand from both new and existing customers. 

The firm said it will continue to target growth in this segment during the second half by focusing on key growth markets, including packaging and photo papers.

It also noted it has already launched a raft of new products this year, including Dolcelicious advanced food grade papers, Tailor-Made bespoke paper for packaging, and Wall Ready Media.

Technical Fibre Products (TFP) saw revenue jump by 20.6% from £8.4m to £10.1m. The company said demand across aerospace, energy and defence markets continues to be strong and it expects continued TFP growth in the second half.

Funded development work continues on key defence technologies for the future and R&D is continuing to play a key role in new product growth in this segment.

The firm also highlighted its 3D products segment (3DP), which it formally launched at the London Packaging Innovations show in September. This business arm offers sustainable moulded fibre packaging products.

The first phase of 3DP investment, earlier this year, facilitated the development while the second phase, planned for early 2017, will deliver greater capacity with additional production equipment. The business said it is confident that 3DP will provide it with another growth platform. 

The group’s pension schemes saw widening deficits. Its IAS 19 valuations, for its defined benefit schemes as at 1 October 2016, revealed a combined deficit of £22.3m, compared with £7.9m as at 2 April 2016. The £14.4m increase was predominantly caused by the discount rate drop from 3.55% to 2.4% in the period, the business said.

An interim dividend of 2.5p per share has been agreed by the board. This is up 13.6% on the prior year interim of 2.2p.

The board is anticipating each business division to grow during the second half and expects the full year to deliver in line with its expectations.

James Cropper chief executive Phil Wild told PrintWeek: "We're pleased with the results in all the operating divisions though they are pretty much what we expected them to be.

"The change that everybody has seen [since the EU Referendum] is in the interest rates, both in dollars and euros, the pound has weakened. For us that has an impact on sales into markets outside of the UK, which is a positive, but the negative is that a lot of our raw material supplies are purchased in foreign currency so the overall impact is pretty negligible from a profit perspective.

"We're staying very close to what's happening with Brexit and it's fair to say that at this stage it's unclear what the impact will be. In terms of moving forwards, we haven't changed our strategy and we haven't seen anything in Brexit that indicates that we should change it.

"Needless to say, our growth plans are global so while we're clearly continuing to focus on the UK, overseas markets are a key part as well. Our approach is to have quite a balanced, diversified approach in all of our divisions."

James Cropper’s share price rose by 10p to 1,099.6p immediately after the results were published yesterday (15 November) and has since settled down to 1,070p at the time of writing.

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