28th Jun 2016 10:49
LONDON (Alliance News) - James Cropper PLC Tuesday said profit soared 50% in its recent financial year as a rise in revenue was led by its Technical Fibre division, allowing the paper and specialist materials group to deliver a material lift to its annual dividend.
Revenue increased to GBP87.9 million in the financial year ended April 2 from GBP83.1 million the year earlier, as both of the company's divisions reported a sales lift in the year, pushing pretax profit up by just short of 50% to GBP5.2 million from GBP3.5 million.
As a result, the company increased its full-year dividend payment by 9.4% to 9.3 pence per share from the 8.5 pence payout in the previous year.
James Cropper's smaller division, Technical Fibre, which sells non-woven materials, was the main driver of revenue growth in the year, increasing 29% to GBP18.7 million from GBP14.5 million, whilst the main Paper unit reported a smaller rise of 1.0% to GBP69.2 million from GBP68.5 million.
With revenue up 5.8% year-on-year, operating profit before exceptional items rose even faster, coming in 62% higher than the previous year, at GBP6.3 million versus GBP3.9 million.
Breaking down that operating profit, the Technical Fibre division once again contributed most of the growth, as operating profit increased to GBP5.9 million from GBP2.7 million, whilst the larger Paper unit made an operating profit of GBP2.6 million in the year, compared to GBP2.4 million the year before.
James Cropper described the rise in the Technical Fibre division as "strong" whilst growth in the Paper unit was "modest".
The substantial growth to come from the Technical Fibre unit was caused by the commissioning of a new production line at the Burneside facility in the UK, doubling its capacity, and from the company's investment in the US, focused on particle plating technology.
"This year's double digit growth [within the division] would not have been achieved, however, without a significant improvement to the operational efficiencies of existing plant. Both sales growth and operational developments are a credit to the teams involved," the company said.
"In Paper, growth has been sustained in a number of targeted markets of which packaging is one with a number of large global contracts acquired with world leaders in consumer electronics and luxury goods. During the year we have invested in additional capacity in embossing and ream wrapping in response to customer demand," James Cropper added.
Notably, James Cropper booked GBP765,000 worth of exceptional items in the recent financial year, with none being booked in the previous period, and the company also booked a hit from its pension scheme.
The pretax profit before those exceptional items and the impact of the pension came in at GBP5.9 million compared to the GBP3.5 million booked a year ago.
Capital expenditure in the period was considerably higher, totalling GBP4.1 million compared to GBP2.6 million the year before, representing a 58% rise, and the company said expenditure on research & development increased by 38% year-on-year.
Net borrowings, however, also increased in the period to GBP7.3 million from GBP6.1 million which pushed gearing up to 22% from 20%.
"The group has performed strongly in 2015 to 2016, a testament to the strategies introduced and deployed in the last few years. Although we will be catching up with a number of deferred repair projects in 2016 to 2017, growth will continue to be delivered with further capital investments across all divisions in support of focused market developments and group wide efficiency improvements," said Chairman Mark Cropper.
"These give me confidence that the group will continue to advance for some years to come," he added.
James Cropper's Burneside facility was hit by Storm Desmond, which brought severe gales and heavy rainfall to southern Scotland, the north of England, Wales and Northern Ireland in early December 2015, and the company plans to carry out a repair and replace programme in the current financial year which will cost around GBP712,000.
James Cropper shares were trading down 0.4% to 715.0 pence per share on Tuesday.
By Joshua Warner; [email protected]; @JoshAlliance
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