TIDMCRPR
RNS Number : 9155Z
Cropper(James) PLC
17 January 2024
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James Cropper plc
("James Cropper", the "Company" or the "Group")
Trading Update
Based on third quarter trading to 31 December 2023, and early
indications in January 2024 for the fourth quarter, James Cropper,
the leading advanced materials and paper & packaging group,
today issues an update on trading for FY2024.
Introduction
As announced on 9 November 2023 in its interim results for the
six months ended 30 September 2023 ("Interim Results") , the Group
saw half-year revenue broadly in line with the Board's
expectations, with strong gross margins and an improvement in the
cost landscape leading to operating profit in line with
expectations. The final two months of 2023 have, however, presented
trading challenges in the Paper and Packaging business and a
slowdown in the pace at which customers expect their revenues to
increase in the Future Energy hydrogen sector of the Advanced
Material business.
Advanced Materials
At the time of the Interim Results, the Group noted that it was
scaling additional capacity for its Future Energy hydrogen offer
and investing in the next phase of expansion in UK electrolyser
manufacturing operations to position the Advanced Materials
business to benefit from growing demand in these markets. However,
since the announcement of the Group's Interim Results, the Advanced
Materials business has seen expected projects in hydrogen being
delayed, partly as a result of inflation and higher interest rates
feeding through to higher project costs. In addition, funding
decisions by governments have impacted end customer project plans
and scheduling. As a result, customer expansion plans saw a
noticeable change with major market growth now expected to be
pushed back to calendar years 2026 to 2028.
The Advanced Materials divisions' revenue trajectory will be
impacted in FY2024 as a result and the Board now anticipates a
slower ramp-up in demand than previously expected across calendar
years 2024 and 2025. Nevertheless, the longer-term outlook for the
hydrogen business remains strong, with the company continuing to
acquire new customers and working on trials and specifications with
proton exchange membrane ("PEM") electrolyser OEMs. Pricing across
the business has been resilient, underpinned by strong customer
relationships which has protected margins.
Growth in the aerospace and automotive sectors continues to
underpin the core Advanced Materials business where we are
executing against accelerated market growth opportunities.
Paper Products
As a direct result of ongoing high inflation impacting consumer
confidence, compounded by supply chain destocking, demand in the
Paper Products business continued to soften to an even greater
extent during Q3.
Despite volume pressures, customer retention has remained high,
supported by strong relationships, and pricing has been resilient.
Lower input costs (energy, carbon, pulp), mix improvements and
productivity initiatives have protected margins and our
restructuring activity is now complete, with continuous running in
production and a reduction in assets since January 2024 allowing
headcount to be reduced by 15%.
Whilst near-term revenues have been affected, the future project
pipeline remains strong and in the meantime the Group will aim to
keep efficiency high through tactical use of free capacity.
The final quarter of the year is expected to show some recovery
in volumes in Paper & Packaging and demand is expected to
further recover throughout FY2025.
Group
As a result of the above trends, the Group now expects full year
FY2024 revenues to be not lower than GBP103m. FY2024 adjusted PBT
is expected to be materially below prior management expectations,
with the Board now expecting to report a small adjusted profit
before tax for the year.
Working capital has been well controlled and the Group's capital
expenditure plans reflect the slower revenue trajectory in Advanced
Materials. As a result, net debt at the year-end is anticipated to
be slightly better than previously expected notwithstanding the
reduced PBT outlook.
Investment in new capacity for hydrogen electrolysers is
continuing at our Launceston site as we gain more specification
work and accelerate trials with a growing number of PEM
electrolyser OEMs.
Steve Adams, CEO of James Cropper, said: "The pressure on volume
from inflation and global uncertainty has, regrettably, resulted in
us revising our profit expectations, despite us continuing to have
a strong future growth plan in place.
The Advanced Materials business saw higher revenues for the
first half but now faces a clear hiatus in the hydrogen sector as
investment decisions are deferred or delayed beyond FY2025.
The Paper & Packaging business division has been hit the
hardest by the drop in demand but continues to focus on mitigating
activities whilst driving productivity and efficiency savings in
line with our restructuring plan.
Overall, despite the setback in profitability, we remain
steadfast in focusing on our strategy for accelerated growth and
the Board is confident that the growth prospects of the Group as a
whole remain significant in the coming years."
Enquiries:
James Cropper plc
Steve Adams, CEO
Andrew Goody, CFOO
Via Buchanan: tel: +44 (0) 207 466 5000
Shore Capital - (NOMAD and Broker)
Robert Finlay, Henry Willcocks, Lucy Bowden
Tel: +44 (0) 7601 6100
Buchanan Communications - Financial PR
Chris Lane, Charles Ryland, Jamie Hooper, Verity Parker
jamescropper@buchanancomms.co.uk
Tel: +44 (0) 207 466 5000
Notes for editors:
James Cropper is a market leader in Advanced Materials and Paper
Products, centred around four market audiences: Future Energy,
Technical Fibres, Luxury Packaging and Creative Papers.
A purpose-led business, built upon six generations of the
Cropper family, James Cropper has a 600+ international workforce
and an operational reach in over 50 countries.
Established in 1845, the Group manufactures creative papers,
luxury packaging and advanced materials incorporating pioneering
non-wovens and electrochemical coatings.
James Cropper is a specialist provider of niche solutions
tailored to a unique customer specification, ranging from
substrates and components in hydrogen electrolysis and fuel cells
to bespoke colours and textures in paper and moulded fibre
packaging designed to replace single use plastics.
The Group operates across multiple markets from luxury retail to
renewable energy. It is renowned globally for service, capability,
pioneering and multi award-winning commitment to the highest
standards of sustainability.
James Cropper's goal is to be operationally net zero by 2030 and
to reduce carbon through its entire supply chain to net zero by
2050.
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