Tissues group confident, despite bigger pre-tax loss

Pre-tax losses deepened at Accrol, the Blackburn-based AIM-listed tissue and toilet roll maker, despite an increase in revenues in the year to April 30, 2023.

The 2022 pre-tax loss of £2.532m widened to £7.818m.

Revenues, meanwhile, jumped from £159.450m in 2022 to £241.914m.

The board has recommended that no dividend be paid to shareholders this year.

However, the group remains bullish, describing its 2023 performance as “strong” in a “challenging year” and pointing to an adjusted pre-tax profit of £6.5m, up from £1.1m the previous year. This is before amortisation, separately disclosed items and share-based payments.

Group volumes increased by 7.7%, compared with an overall flat tissue market, Accrol said, while its market share increased by 200bps to 21.5% (FY22: 19.5%).

It said known volume gains will positively impact the second half of the current fiscal year, with the group well positioned to grow ahead of the overall private label sector.

But revenues are expected to fall marginally as tissue prices reduce and, therefore, on-shelf pricing declines as inflationary pressures ease.

The board said it views the future with increasing confidence, while remaining mindful of the continuing inflationary environment and other macro challenges.

Chief executive, Gareth Jenkins, said: “The group has performed strongly in a challenging year, gaining further market share through its great value product range, broad retailer base, and new routes to market and is in an enviable position to take advantage of the changing dynamics in consumer spending, which are particularly evident in the tissue market.

“Accrol is the lowest cost tissue convertor in the UK and is fully automated across all tissue sites, having completed all major converting strategic capital investments in the year.

“With the development and focus on market leading products, for softness in Toilet Tissue and absorbency for Kitchen Towel, we have generated significant volume and market share growth across all sectors of our business.”

He added: “The cost-of-living crisis is continuing to drive consumer demand for great value products and the group is confident of achieving further volume and profit growth in FY24, as it continues to build on its market leading position.

“Our focus on increasing volumes, business mix and efficiency has already delivered an improvement in margins back to pre-pandemic levels in the first few months of the new financial year. This margin recovery has been quicker than expected and we now expect FY24 EBITDA will be ahead of the board’s prior expectations.”

Dan Wright, executive chairman, said: “The group has delivered a very strong set of results of which we are very proud.

“The management team successfully navigated and mitigated the well-reported and substantial inflationary pressures on a broad range of input costs, through further process efficiencies and by engaging constructively with our customers to pass on these additional costs.

“We have a strong, market leading position, with a clear focus on remaining the lowest cost producer of any scale.

“Our product mix is strengthening margins and cash generation is growing. We are, therefore, confident that our FY24 EBITDA will be ahead of initial board expectations.”