23 July 2024
James Cropper plc
(‘James Cropper’, the ‘Company’ or the ‘Group’)
Full Year Results
Robust response to a challenging trading environment; progress against strategic objectives
James Cropper plc (AIM: CRPR), the Advanced Materials and Paper & Packaging group, today announces its audited results for the year ended 30 March 2024.
Headlines
Financial
· Challenging year with Group revenue down 21% at £103.0m (2023: £129.7m) due to weaker end-market demand and energy surcharges (totalling £9.0m) in the prior period.
· Adjusted operating profit* of £2.0m (2023: £4.8m) with the impact of revenue shortfall partly mitigated by falling raw material and energy prices and cost savings from actions to streamline the business.
· Adjusted profit before tax** of £0.8m (2023: £3.2m), ahead of revised Board expectations announced on 17 January 2024 despite significant market challenges impacting performance in the second half.
· Exceptional costs of £5.3m (2023: £1.1m) including restructuring costs of £2.3m and non-cash asset impairment charge of £4.4m, partly offset by £1.4m credit from settlement of pensions-related legal claim.
· Loss before tax of £5.3m (2023: profit of £1.3m) after exceptional costs and IAS 19 pensions charge of £0.8m.
· Net debt of £15.5m, down £1.1m (2023: £16.6m) reflecting increased focus on cash management.
· Capital expenditure reduced to £3.8m (2023: £5.8m) in response to market conditions.
· Basic and diluted loss per share of 41.8p (2023: earnings of 5.4p per share).
· No final dividend proposed, resulting in a total dividend for the year of 3.0p per share (2023: 6.0p per share).
*Alternative Performance Measure 1 (APM1) “adjusted operating profit” refers to operating profit before interest and prior to the impact of IAS 19 and exceptional items.
**Alternative Performance Measure 2 (APM2) “adjusted profit before tax” refers to profit before tax prior to the impact of IAS 19 and exceptional items.
Operational
· Products increasingly focused on end-markets with strong secular growth trends: clean energy, lightweighting and sustainability.
· Restructured Paper & 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.
· More rigorous capital investment, cost and cash disciplines applied across the business.
· Refreshed executive leadership team focused on driving our growth strategy.
Current trading and outlook
· FY2025 year-to-date trading has been in line with the Board’s expectations.
· Input costs (pulp and energy) have remained high through H1 FY2025.
· Strong opportunity pipeline in Advanced Materials where, despite slower end-market growth in hydrogen fuel cell in FY2024, the mid-term outlook for both Energy Solutions and Composite Solutions remains strong.
· Order intake levels in the Paper & Packaging business point to signs of recovery in FY2025 and the new operating model is delivering improved margins.
· The Board remains confident that, despite external challenges, the Group is positioned to drive increased value for shareholders through a return to growth in the Group’s key markets.
· Clear strategic priorities and medium-term targets to capitalise on market opportunities:
o Targeting mid-to-high single-digit annual revenue growth and an increase in adjusted operating profit margin to high single digits over the medium term, driven by:
§ Advanced Materials business growth, including revenues from Energy Solutions rising to in excess of 15% of Group revenue.
§ Innovation in higher margin technologies across the businesses aligned with strong end-markets.
§ Leveraging the Group’s focus on sustainability and recycling.
§ Further productivity gains through lean continuous improvement.
o Targeting a medium-term increase in return on capital employed to low-to mid-teens, through greater capital allocation discipline directed largely towards the hydrogen business to meet anticipated demand.
o Maintaining and strengthening the balance sheet, with a medium-term Net Debt to EBITDA ratio target of 1-2x.
Commenting on the full year results, James Cropper CEO 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 & 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.
“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 & 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.”