Toilet tissue firm now profitable and ‘fit for purpose’
Blackburn toilet roll maker Accrol reduced annual losses and said it is now profitable.
The business, which is undergoing a transformational restructuring, reported figures for the year to April 30, this morning.
Reported figures showed a drop in turnover from £139.7m to £119.1m, although pre-tax losses were slashed from £24.1m the previous year, to £14m this time.
Net debt has also been reduced to £27.1m from £33.8m a year ago.
The firm, which makes toilet tissue, kitchen towel and facial tissue, declared that it “is now profitable, cash generative and fit for purpose”.
Earlier this year the FCA (Financial Conduct Authority) announced it was investigating the company over “misstatements in previously published accounts”.
Today, Accrol said that total exceptional costs in financial year 2020, including costs associated with the FCA investigation, are expected to reduce to around £1m, compared with £7.9m this year, of which £500,000 will relate to final turnaround activities.
The board has approved, in principle, the investment in further machine capacity and the group will continue to optimise production through automation, it said.
Net debt is expected to continue to improve as the business grows
The firm said it is also perfectly positioned to capitalise on the accelerating consumer shift from expensive established brands to best value tissue products
And it confirmed that, despite strengthening foreign exchange headwinds, the group remains on track to meet market expectations in 2020.
Executive chairman, Dan Wright, said: “The new board and management team of Accrol delivered a complex and comprehensive turnaround plan in FY19, simplifying and strengthening the business to improve efficiency and optimise operational performance.
“Following the conclusion of this restructuring, I am pleased to say that I believe the business is more operationally efficient and fit for purpose than it has ever been.
“By the end of the year, we achieved our stated objective to return the group to monthly profitability and I am pleased to report that the reengineered business is showing resilience in the face of strengthening FX (foreign exchange) headwinds. The group is beginning to secure enhanced credit terms from its key suppliers and capitalising on this initiative is a core element of our continued working capital management and improving debt profile.”
He added: “The group has delivered improving levels of monthly profitability since the year end. As such, we are on track to meet market expectations in FY20 and the board is confident that the group will exit FY20 at an accelerating monthly run rate.”
Chief executive, Gareth Jenkins, said: “The heavy lifting of the turnaround is now behind us and the ongoing challenge of maintaining consistent delivery of low cost, quality product to our customers remains. We are now able to instil continuous improvement disciplines into an operation that is fit for purpose.
“As the new financial year progresses, we will continue to be innovative in our approach to winning new business and take steps to bring our low cost, high service brand-killer approach to different products and markets.
“We keep a watchful eye on the strength of the pound and will take the steps necessary to mitigate the risks of continued currency weakness, but that should not distract us from profitably meeting our customers’ needs.
“The business has now been reset. There is a huge opportunity for the group in the rapidly growing personal hygiene value market and, whilst there is more to do, the board has real confidence that the foundations have been laid for a successful future.”
The board is not proposing a final dividend for 2019, but it remains its intention to return to the dividend list at the earliest appropriate opportunity.
