James Cropper hails transformational year, with momentum expected to continue

Kendal-based paper and packaging business James Cropper unveiled a 24% increase in revenues during a transformational year focused on a strategic shift in direction for the group, which CEO Steve Adams said is already delivering.

Sales in the year to April 1, 2023, were £129.644m, although pre-tax profits dropped from £2.777m to £1.313m. A 6p full year dividend is in line with expectations, compared with 10p per share the previous year.

Profits were affected by an increase in net finance costs and exceptional costs of £1.1m, associated with the group’s repositioning, and outperformance at the TFP Hydrogen division.

Net debt of £16.6m was up 35% on last year’s £12.3m.

The group reported a strong global pipeline in the Future Energy sector. TFP Hydrogen exceeded expectations and the group is well advanced in the transformation of the Paper division post year end.

Looking to the future, the group said it expects Future Energy and Luxury Packaging to deliver high market growth and value, respectively.

There will be consolidation across the organisation and estate to reduce costs and improve efficiency, with the streamlined Paper Product offer to drive margin improvements and productivity.

In April the company announced a strategic change in direction from its traditional standing as a specialist paper manufacturer to focus on higher growth markets to drive margin improvement. This involved shedding around 10% of the workforce, mainly in the streamlined paper division, as well as group functions.

It reorganised from three separate divisions – James Cropper Paper, Technical Fibre Products and Colourform – into four market-facing segments all under the group name.

• James Cropper Creative Papers, the historic business supplying specialist paper markets with a range of coloured and embossed papers, and unique sustainable fibre options.
• James Cropper Luxury Packaging, incorporating James Cropper’s Colourform moulded pulp innovation and the packaging papers made for the world’s leading luxury brands.
• James Cropper Technical Fibres, aimed at core technical fibre markets including aerospace, defence, construction and industrial.
• James Cropper Future Energy, incorporating TFP Hydrogen, and including materials and products for fuel cells, carbon capture, batteries and wind.

The revamp is supported by a multimillion-pound investment over the next three years to simplify processes and systems and combine group functions.

James Cropper CEO, Steve Adams, told TheBuinessDesk.com this morning that he is pleased with the repositioning strategy. He said: “All of the repositioning is pleasing, in a number of senses.

“One, is that it is a more modern way of looking at the company, rather than our traditional divisional structure. We’re very much transitioning towards a company which is looking at its customers, segmenting around four customer-facing segments.

“It also re-states our ambition about focusing on high growth spaces, particularly our luxury packaging and future energy space. I am very pleased with the realignment of the business and the more modern outlook that we have positioned.”

He is also confident that the momentum of the 2023 fiscal year can be carried through to the current financial period.

He said: “Full year ’23 was very much a transformational year. We outlined our strategic plan at the half year point. We have made good progress against our strategic plan and I would say we’re probably between half way and two-thirds of the way through our journey.

“This year again will be a transformational year, but it’s all about consolidating on the changes that we have made so far, particularly with a view to landing some of the restructuring and repositioning to drive growth, and also drive margin improvement for the company.”

He added: “I am very pleased that we have laid the foundations, we have laid very solid foundations in the last 12 months.

“This 12 months is still part of that transformational journey, but it’s now building on that transformation to really leverage sales through new customer acquisition, primarily, and restructuring and consolidation actions will drive margin improvement.”

The group’s broker, Shore Capital, said: “We have maintained our adjusted PBT group forecasts for FY24F and FY25F, in which we expect the combined JCP/Colourform to be profitable.

“We have also introduced an adjusted PBT forecast of £11.0m for FY26F, which reflects some of the profit growth potential to be delivered by the accelerated growth strategy.”