James Cropper hails 'watershed' year as sales and profits grow

By Richard Stuart-Turner, Tuesday 27 June 2017

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Cumbrian papermaker James Cropper has posted strong revenue and profit growth in its annual results.

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James Cropper recorded revenue of £92.4m for the year ended 1 April 2017

For the year ended 1 April 2017 the company recorded revenue of £92.4m, up 5.12% from £87.9m a year ago.

Adjusted operating profit, prior to the impact of IAS 19 pension adjustments and exceptional costs, grew by 10% from £6.3m last year to £6.9m. Adjusted profit before tax – after exceptionals and prior to IAS 19 – was £6.6m, up 27% on the £5.2m recorded in 2016. Pre-tax profit climbed by by 44% from £3.9m last year to £5.6m.

By division, James Cropper Paper revenue was up by 2.8% from £69.1m to £71m while the division’s operating profit rose by almost a quarter from £2.6m to £3.2m.

The firm said these improvements have been underpinned by focusing on core markets such as packaging and digital imaging as well as ensuring it maintains strong relationships with key accounts.

Another important development in this division, the company said, was the appointment of Steve Adams as its managing director. James Cropper chief executive Phil Wild had previously overseen this division for many years and the company said this move enables Wild to give greater support across the group on business growth strategies.

Technical Fibre Products (TFP) saw revenue of £21.3m, up 14% from £18.7m in 2016, with operating profit up 1% from £5.9m to £5.94m. The business said profits in this division were only marginally ahead of the prior year because of extra costs predominantly associated with investment in additional capacity for growth in future years.

The group’s newest division, 3D Products (3DP), saw significant investment in production equipment, which is now fully commissioned. The company said the division – which recorded sales of £7,000 and an operating loss of £426,000 – is seeing strong interest in its range of coloured moulded pulp, designed to replace plastics in a range of industries.

The group envisages the division will be cash generative this year with strong growth potential for many years thereafter.

The company also said the result of the Brexit vote has not led to any changes in its investment programmes or other strategies.

To date it said the prime impact has been a weaker sterling, which led to modest currency gains for the group owing to more than 50% of its turnover being exported. The board is monitoring the potential risks “very carefully” and said scenario planning is underway.

The firm’s pension deficit rose sharply from £6.5m in 2016 to £15.6m this year.

The group operates two funded pension schemes providing defined benefits for a decreasing number of its employees.

These schemes are sensitive to a number of key factors including the value of the assets, the discount rate used to calculate the schemes liabilities – based on a premium above gilt yields, the rate of inflation and the mortality assumptions for members of the schemes. Changes in these assumptions can impact the deficit positively or negatively, the group said.

James Cropper chairman Mark Cropper attributed the company’s sustained growth to strategic plans it has introduced in recent years as well as the contribution provided by its employees.

“I feel this year has represented something of a watershed for the group. We have built on prior successes and are beginning to deliver a level of potential we have felt possible for so long,” said Cropper.

He added: “I am hopeful our vision and values are underpinning a business that is sustainable in every sense of the word: not only as represented in our products and materials, but also in terms of our people at all levels.

“A recent upshot of this is that the board now feels more able to turn its attention to the longer term, looking at strategies to ensure growth beyond the customary three years.

“It is too early to say much more, but owing to our determination to remain independent, organic growth centred on an outstanding culture of innovation is likely to feature strongly.”

Basic earnings per share have increased by 54% to 50.5p per share with diluted earnings per share increasing by 57% to 50p per share. The board has recommended a final dividend of 9.3p per share, making a total dividend for the financial period of 11.8p per share – up 27% on the prior period.

James Cropper’s share price was at a 12-month high of 1,647.5p at the time of writing following a relatively steady upward trajectory from a value of 720p at this time last year. 

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