Paper firm aims to mitigate rising costs with capacity expansion
Cumbria-based paper products specialist James Cropper has warned that the rising price of pulp will impact its financial results for the current year.
However, in a trading update released this afternoon (September 18), it said its technical fibre products (TFP) division is showing strong and steady sales and profit growth.
Also, James Cropper 3DP, trading as ‘Colourform’, is fulfilling a number of commercial contracts and enjoys a growing pipeline and is delivering on sales growth, generating revenue, and “will provide profits for the group as it scales”.
Today’s update said since the Kendal-based group’s full year results, to March 31, the strength of the pulp price has continued, and it remains above levels forecast by its external specialist. It said: “We now expect these higher price levels to continue for the foreseeable future”.
The net impact of the higher pulp price on the group’s pre-tax profits for the current year is now expected to be a further £2m.
It said the focus of the paper division now is on improving the sales mix and seeking to recover margin through price increases.
“Nevertheless, the sustained current high pulp price will have a material impact on the division’s and the group’s results for the current financial year,” it added.
On a more positive note, it confirmed that, to exploit the upturn in its TFP division, a decision has been made to expand its capacity by a further 50%, from the start of 2021.
The board said it takes into account the strong prospects for TFP and Colourform against the difficult pulp price environment for the paper business and remains very confident in the strategy and subsequent growth for all divisions across the group.
Chairman Mark Cropper said today: “The persistently higher pulp prices is impacting the returns from our paper business.
“Against this the success of TFP and 3DP reflects the continuing efforts of the board to grow advanced technology businesses with reduced exposure to the uncertainties of commodity prices.”
The company expects to announce its half year results to September 29, 2018 in the week commencing November 12, 2018.
