James Cropper plc
(“James Cropper”, the “Company” or the “Group”)
Interim Results
James Cropper plc (AIM: CRPR), the Advanced Materials and Paper & Packaging group, announces its unaudited results for the six months ended 30 September 2024 (‘H1 FY25’).
Financial headlines
- Group revenue of £49.9m, +7% against the challenging H2 FY24 but 11.7% below the same period last year (H1 FY24: £56.5m) when fuel cell revenue in Advanced Materials was at an elevated level and prior to supply chain disruption across Paper & Packaging.
- Adjusted operating profit of £0.4m, up £1.4m against H2 FY24 but £2.6m below the same period last year (H1 FY24: £3.0m), due to lower revenue and rising input prices in the Paper & Packaging businesses, partly offset by margin growth in the Advanced Materials business and strong overhead cost control across the Group.
- Adjusted1 loss before tax of £0.2m (H1 FY24: adjusted1 profit before tax £2.4m).
- Statutory loss before tax of £0.6m (H1 FY24: profit before tax of £2.4m).
- Loss per share of 5.1p (FY24 H1: earnings per share 19.4p).
- No interim dividend proposed (H1 FY24: 3.0 pence per share).
- Improved net debt of £13.1m (H1 FY24: £13.3m), down from £15.5m at the year-end with continued careful control of working capital and capital expenditure of £0.6m (H1 FY24: £1.4m).
Operational headlines
Advanced Materials
- The Advanced Materials business experienced good momentum. The business benefitted from a strong recovery in aerospace and defence demand and maintained a robust gross margin performance, due to resilient pricing and productivity initiatives.
- Within the Energy Solutions segment, the hydrogen fuel cell market remained subdued, but the PEM electrolyser business showed encouraging signs of recovery.
- The reshaped leadership team in Advanced Materials is reinforcing the focus on growth markets and leveraging our excellent customer proposition to maintain strong margins.
Paper & Packaging
- The core paper business recovered well in H1 FY25 against H2 FY24 with key markets returning to normalised patterns and pricing being supported by strong customer relationships.
- The luxury packaging market remained challenging due to the slowdown in China and reduced demand being experienced by some luxury brand customers.
- Sales of Colourform moulded fibre products were impacted by the ongoing weakness in the luxury packaging market, particularly the wines & spirits sector.
- Paper & Packaging input prices remained high through H1 FY25, partly mitigated by rigorous cost control disciplines and sourcing efficiencies.
- Volume-based business development is being accelerated to counter the market softness but will have an impact on overall Group margins.
Current trading and outlook
- Advanced Materials H1 FY25 revenue growth momentum is expected to continue through H2 based on forecast customer projects, with the outlook in aerospace, defence, construction and hydrogen PEM electrolyser remaining strong.
- Challenging conditions remain in the Paper & Packaging business due to the ongoing fragility in the luxury packaging sector and customers in the photographic board sector recently forecasting reduced revenues for the remainder of FY25.
- As a result of the prolonged weakness in Paper & Packaging market conditions, the Board now expects that the Group’s results for FY25 will be below its prior expectations, with full year revenue and adjusted profit before tax expected to be broadly at the same level as the Group’s FY24 reported results.
- Robust cost controls embedded across the Group are providing a level of mitigation for the lower demand in the Paper & Packaging division and maximising working capital efficiency.
- Strong cash management disciplines have resulted in an improved net debt position reported for H1 FY25.
- Both businesses continue to focus on accelerating growth opportunities in new markets and the Board’s performance expectations for the Group in the medium term remain unchanged.
- David Stirling will join the Group in January 2025 and succeed Steve Adams as Chief Executive Officer following a short handover period.
Commenting on the half year results, James Cropper CEO Steve Adams said:
“Although trading was challenging in the first half of the financial year, the Group was able to achieve sequential growth in revenue and profit with clear signs of recovery across most segments of the business.
“The Advanced Materials business continues to benefit from its focus on end-markets with strong secular growth trends, and it is demonstrating traction in its growth strategy with an expanding portfolio of opportunities in new technologies and markets. The Paper & Packaging business has seen slower recovery due to ongoing global market softness in some of its key sectors. Tight cost control and mitigation efforts are in place to defend margins especially whilst input costs continue to fluctuate.
“Our teams have worked diligently to maintain value through new business development activities, preserving and strengthening our existing customer relationships through enhanced collaboration and partnership, and remaining steadfast in our focus to leverage our capabilities through new product and technology development, underpinned by our strong brand presence.
“The fact that our direct customer base remains stable and intact, and that we are seeing positive trends in various end markets, gives us confidence that the Group is positioned for growth once end market conditions stabilise and improve.
“As announced in October, I retire from the Board in early 2025 after seven years on the Group Board. I very much look forward to supporting my successor David Stirling in achieving a smooth transition and am confident that the Group will thrive under his leadership.”