Cumbria group comes a Cropper after tough second half trading period

A tough second half of the year has dragged Cumbria’s James Cropper into a full year loss due to sluggish markets, it revealed today, resulting in the group slashing its total dividend payout to shareholders.

The Kendal-based advanced materials and paper and packaging group forecast it would see annual profits “slightly ahead” of previous expectations in an April trading update.

However, its annual results for the year to March 30, 2024, which is a week shorter than the previous reporting period, revealed revenues have plummeted by 21% to £102.968m, while a pre-tax loss of £5.261m was in comparison with a pre-tax profit of £1.313m a year ago.

The group incurred exceptional costs of £5.3m, including restructuring costs in the paper and packaging business of £2.3m and a non-cash asset impairment charge of £4.4m, partly offset by £1.4m credit from settlement of a pensions-related legal claim.

No final dividend is proposed, resulting in a total dividend for the year of 3p per share, against 6p per share in 2023.

The group said that, despite progress in its repositioning strategy, some of its most promising growth opportunities, not least those in hydrogen and fuel cells, are taking longer to bear fruit than previously expected due to delayed market growth.

Earlier this year it also acknowledged that the difficult market conditions across the paper and packaging business were expected to continue through the second half of the year.

The second half also saw a marked slowdown in hydrogen fuel cell market demand, driven largely by the sluggish uptake of hydrogen-powered passenger cars.

This was partially offset by growth in the electrolyser business, albeit at a level below the board’s original expectations due to delays in major infrastructure projects.

Going forward, the group said products are now increasingly focused on end-markets with strong secular growth trends – clean energy, lightweighting and sustainability.

The restructured paper and packaging business has a more efficient operating model and reduced break-even revenue. Pricing has been resilient, underpinned by strong customer relationships with margins supported by lower input costs and productivity initiatives.

There is more rigorous capital investment, cost and cash disciplines applied across the business and a refreshed executive leadership team focused on driving the growth strategy.

Current trading for the 2025 fiscal year has been in line with expectations, the board said, although input costs (pulp and energy) have remained high through the current period.

It sees a strong opportunity pipeline in advanced materials where, despite slower end-market growth in hydrogen fuel cell in 2024, the mid-term outlook for both energy solutions and composite solutions remains strong.

Order intake levels in the paper and packaging business point to signs of recovery in 2025 and the new operating model is delivering improved margins, it said.

Chief executive, Steve Adams, said: “After a strong first half that showed continued momentum on the previous year, difficult market conditions during late 2023 and early 2024 across both businesses required a concerted effort to protect prices and margins and to focus on productivity and cost savings.

“This was achieved whilst also concluding the significant restructuring of our paper and packaging business and adopting a completely new continuous running operating model for the first time.

“Our teams also remained focused on identifying new growth opportunities and winning new customer projects.”

He added: “I am extremely proud of the entire James Cropper team for their commitment to our business and servicing our many customers around the globe.

“We remain resolute in our focus on driving value for our shareholders through our accelerated growth strategy. The advanced materials business remains poised to capitalise on the anticipated scale-up in the hydrogen sector through clarity on national government funding and support programmes for green hydrogen.
“Order intake levels in the paper and packaging business point to signs of recovery in FY2025 and our new operating model is already delivering improved margins. Group trading in the first quarter of the current year-to-date is in line with the board’s expectations.

“The foundations have been laid for ongoing productivity and efficiency gains. Our new James Cropper branding offers the opportunity to connect and build traction with both new and existing customers, while our commitment to innovation focuses on developing new high value products and technologies.”