24 Aug. 2023: James Cropper plc, a global market leader in advanced materials, luxury packaging and paper products, today announces a strong financial recovery, including revenue growth for the Paper division.

In a transformational year for the Group, the business delivered a resilient performance. For the year ended 1 April 2023 revenue increased 24% to £129.7million, driven by high demand and retained contracts. Adjusted operating profit also increased, by 4% to £4.8million, despite significant inflationary cost headwinds.

The Paper business, which is at the centre of James Cropper’s transformation strategy, has shown impressive revenue growth of 25% to £88.2million despite a challenging cost base. These challenges included unprecedented increases in raw material and energy prices, alongside a sales decrease in certain traditional volume areas, necessitating a right-sizing of the business.

This streamlining is part of the Group’s repositioning to capitalise on growth opportunities, which includes reorganising three divisions into four market-facing segments under the Group name; Creative Papers, Luxury Packaging, Technical Fibres and Future Energy.

Having led James Cropper’s transformation programme, Richard Bracewell has recently been appointed Managing Director of Paper Products, responsible for the Creative Papers and Luxury Packaging segments. He commented on the results: “Today, the business is transitioning to an advanced materials and paper products group, committed to creating a greater global presence for James Cropper and better serving our existing and new customers.

“In particular, within Paper Products, we are focussing our offer on luxury packaging and premium creative papers where our customers really value our innovation, expertise and quality. The integration of Colourform® into James Cropper Luxury Packaging will drive a unique and compelling proposition, building better efficiencies in our operating model and increasing relevance and scale in key markets.”

In the year ended 1 April 2023, Colourform, maintained a strong sales pipeline and demonstrated 29% revenue growth, driven by innovative new market launches in the luxury drinks and cosmetics sector with brands such as Perrier-Jouët and Lancôme.

Paper Products operating highlights:
Significant progress has been made against plans to restructure the Paper division around a profitable core; a multi-million pound Embossing Centre of Excellence has been installed with state-of-the-art embosser varnisher and smart eye production technology to meet growing demand for surface aesthetics.

Furthermore, moving from four to three paper machines, with two operating on a 24-hour basis, will allow for improved operational efficiencies, effective scheduling of maintenance cycles and more focused investment on papermaking assets.

The launch of James Cropper’s FibreBlend Upcycled Technology programme offers a wide choice of different recovered fibre categories, embracing the key strands of a circular economy system with intricate understanding of fibre from over 175 years of papermaking and a dedicated team of experts in recovered fibre. The offer builds on James Cropper’s award-winning CupCycling proposition – the world’s first technology to give a second life to used coffee cups. At present, over 75% of James Cropper’s custom-made paper products contain a blended fibre source.

Group highlights
Technical Fibre Products (TFP) generated an adjusted operating profit of £9.2m compared with £8.7m in the prior period. TFP Hydrogen continues to exceed expectations with a new Hydrogen plant in New York replicating the successful UK site, bringing capability closer to US customers. A strong pipeline in the Future Energy Sector also includes the reach in Asia, North America and Europe.

Likewise, following a comprehensive feasibility study, a 40% lower capital investment is now required to deliver James Cropper’s ambitious decarbonisation programme that will result in being operationally carbon neutral by 2030 and net zero across the entire supply chain by 2050. Having achieved a 16% reduction in carbon footprint in the last year, James Cropper is also making progress on the ambition to use 25% less natural gas by 2025.

Ongoing energy saving actions across the Group have contributed to an 8% annualised reduction in site fuel consumption in the last year alone. James Cropper is on track to build a Low Carbon Energy Centre with the necessary planning application attained and grant application awarded.

Financial headlines:
• Strong recovery in a transformational year, with a 24% increase in revenue to £129.7m (2022: £104.9m) driven by high demand and retained contracts
• Despite the significant inflationary cost headwinds, adjusted operating profit increased 4% to £4.8m (APM1*) (2022: £4.6m)
• £3.2m adjusted profit before tax, 21% lower (2022: £4.0m) (APM2**) due to an increase in net finance costs
• Exceptional costs of £1.1m which reflects outperformance at TFP Hydrogen and consequent reassessment of the value of contingent consideration (2022: £0.4m)
• Profit before tax of £1.3m, 53% lower (2022: £2.8m) due to an increase in net finance costs and exceptional costs
• Net debt of £16.6m up 35% (2022: £12.3m)
• Earnings per share 5.4p down 62% (2022: 14.2p)
• Full year dividend proposal 6.0p per share in line with expectations (2022: 10.0p)
*APM1 “Adjusted operating profit” Adjusted operating profit refers to operating profit before interest and prior to the impact of IAS 19 and exceptional items
**APM2 “Adjusted profit before tax” Adjusted profit before tax refers to profit before tax prior to the impact of IAS 19 and exceptional items

Full financial report available here: https://www.londonstockexchange.com/news-article/CRPR/full-year-results/16096158