Paper maker’s profits warning as pulp costs soar
Listed Cumbrian paper maker James Cropper and the pioneer of the world’s first recycling process for takeway coffe cups has warned its full-year profits will be about £1.5m less than predicted as a result of soaring pulp costs.
The Kendal company has generated positive publicity recently from developing the world’s first “Cupcycling” process, but the board now expects its pre-tax profits for the 12 months to March 31, 2018 to be in the region of £5.7m.
In November, the firm said it was on course to perform in line with expectations, notwithstanding £2m of adverse headwinds due to increasing pulp prices on its paper division.
This was offset by interim cost savings and the trading strength of it’s the company’s technical fibre products (TFP) division.
However, since that half-year announcement, the price of pulp has continued to rise beyond levels forecast by the group’s external specialists.
The impact of the pulp price on the group’s profits is now expected to be about £3.5m, with a net impact, allowing for the savings and the TFP trading of £1.5m.
A statement said: “James Cropper Paper’s (Paper) underlying performance year-on-year, excluding the effect of rising pulp prices, remains healthy with operating margins increasing in line with board expectations.
“Positive media reports on Cupcycling have generated additional interest in the company’s capability and brand.
“Moving forward, the company expects the pulp price to reduce to more normal levels over the next 12 months. Notwithstanding this, Paper is accelerating investigations into alternative strategies that should minimise the effects of such commodity price increases in future years.”
