Cost of materials hit paper firm’s profits
The cost of raw materials affected profits at Kendal based paper firm James Cropper.
Revenues were up at the firm, but profits fell as a result of increased costs.
Revenues passed the £100m mark and were up to £101m from £96.3m the previous year.
However operating profit was down to £4.3m from £6.1m.
Adjusted profit before tax was £4m compared to £5.8m the previous year.
Chairman Mark Cropper said: “This has been another challenging year for the group, with profit before tax falling by 43% to £2.6m.
“The dominant headwind has continued to be pulp cost increases. For the second year in succession these have outstripped market expectations, increasing cost pressures on our paper business by over £6.5m over two years.
“It has been impossible to pass all of this on within the timeframes, resulting in a loss for Paper of £2m in the current period. In addition, group profits have also been weakened by operating losses within James Cropper 3D Products Ltd (“3DP”), incurred as we scale up our investment to meet anticipated demand for this new subsidiary.
“Nevertheless, the strength of the group remains strong with record revenues, product mix improvements delivering good underlying performance, investment on the increase and sound EBITDA levels providing clear headroom against our covenants. I am particularly pleased to report increased profits within Technical Fibre Products Ltd (“TFP”), with operating profit growing by almost 20% to £8.8m, another record for this subsidiary.
“This was underpinned by revenue growth of 6.3% which itself was spread across all products and markets.
“Coupled with positive revenue growth of 4.3% for Paper, group turnover exceeded £100m for the first time. Positively, the growing demand for our products continues to become more global.
“Exports edged upwards to 56.3% in the current year, although this only tells part of the story: the growth of many of our UK customers has also been export driven, further shielding us from any potential Brexit related weakness in our domestic market.”