REG - Cropper(James) PLC - Half Year Trading Update

James CropperAnnouncement

31/10/2022 07:00

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RNS Number : 5724E  Cropper(James) PLC  31 October 2022

 

Half Year Trading Update

 

 

'Unprecedented inflationary headwinds impact the half year; the Group
continues to prepare for growth'

 

In advance of its interim results announcement due on 15 November 2022, James
Cropper plc ('CRPR', the 'Company' or the 'Group'), the leading advanced
materials and paper products group, today issues an update on trading for the
half year ended 24 September 2022.

 

Financial performance

As announced at the Annual General Meeting on 27 July 2022, the Group
experienced a strong start to its financial year, with revenues in Q1 2022 up
36% on the prior year (Q1 2021), with demand across all three divisions ahead
of the prior-year quarter. Revenues for the half year were up on the prior
year (H1 2021) by 26%, with demand remaining strong across all divisions.

 

As a direct result of continued wholesale gas price rises, the Group's energy
costs have increased by 148% versus prior year. The impact of inflationary
pressures had been mitigated in the first part of the year by the application
of energy surcharges but energy prices again spiked from late July and again
in August. At the same time raw materials (which represent a larger proportion
of overall costs) have been subject to unprecedented inflationary headwinds,
rising 20% over the same period. The Group has responded to the
£multi-million impact of these sudden rises with a combination of energy
surcharges and price increases but the time to implement these has
nevertheless resulted in margins temporarily being squeezed, especially so in
Paper.

 

The net result has been that the Group has achieved a break even position for
the first half of the year.

 

The second half of the year shows a recovery through aggressive pricing
actions and surcharges, supported by the recently announced Government support
on energy prices. Each division is projecting volume growth over the second
half. Order books are full and the Company is focused on a range of enabling
actions to build a solid foundation for continued future growth.

 

As a result of the current unprecedented macro-economic environment,
management expectations for FY23 have been reduced with a year-end adjusted
PBT of £2.0m against previous market expectations of adjusted PBT of £5.4m.

 

Investment to support growth

The embossing and varnishing capacity in the Paper division, providing
additional capability to meet demand in the luxury packaging market, is now
installed and commissioned. Additional coating capacity for TFP Hydrogen in
the USA is now operational. The Group remains committed to decarbonisation and
our plans for this have moved into the detailed design stage, with site
arrangements under review to facilitate the construction of a new energy
centre. We expect the design work to be completed as scheduled this financial
year.

 

Outlook

Mark Cropper, Chairman of James Cropper, said: "The uncertainty and
unprecedented inflationary pressures from rising raw material and energy costs
have forced us to revise our profit expectations, despite each division
showing strong demand and growth in sales. The Paper division has been hit the
hardest due to being an intensive energy business, but is successfully
mitigating the impact with price increases and increased energy surcharges."

 

"TFP has had higher revenues for the first half albeit with growth not
materialising as quickly as expected. The new hydrogen coating line in the USA
is now commissioned and ready to support growth in the North American hydrogen
market."

 

"The Colourform division continues to maintain a strong pipeline of sales and
the division's eye-catching and eco-friendly packaging designs have received
further international accolades."

 

"Overall, despite the short term setback in profitability, growth prospects
for the Group as a whole remain significant in the coming years."

 

James Cropper Group - Purpose: Pioneering Materials to Safeguard our Future
and Values: Forward Thinking, Responsible and Caring.

 

 

Enquiries

 Isabelle Maddock, Chief Financial Officer           Robert Finlay, Henry Willcocks, John More
 James Cropper PLC (AIM :CRPR.L)                     Shore Capital
 Telephone: +44 (0) 1539 722002                      Telephone: +44 (0) 20 7601 6100
 www.jamescropper.com (http://www.jamescropper.com)

 Media Enquires:

 Anna Geffert, MD

 HERA Communication Strategies

 anna.geffert@heracomms.com (mailto:anna.geffert@heracomms.com) / +44 (0) 7773
 046 337

 

 

 

 

 

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