In the results released today (24 August) for the year ended 1 April 2023, group revenue increased by 24% to £129.7m (2022: £104.9m), driven by high demand and retained contracts.

Its adjusted operating profit increased by 4% to £4.8m (2022: £4.6m), despite significant inflationary cost headwinds, but its adjusted pre-tax profit (prior to the impact of IAS 19 and exceptional items) fell by 20% from £4m in 2022 to £3.2m due to an increase in net finance costs.

Pre-tax profit fell by 53% from £2.8m to £1.3m due to an increase in net finance costs and exceptional costs.

The Paper division, which is at the centre of James Cropper’s transformation strategy, reported revenue growth of 25% to £88.2m, despite a challenging cost base, the company said.

A “multi-million pound” Embossing Centre of Excellence has been installed with embosser varnisher and smart eye production technology to meet growing demand for surface aesthetics.

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

In his chairman’s statement, Mark Cropper said the decision to restructure to three machines, with the associated headcount reductions, “was not taken lightly but has been essential to address years of headwinds and margin pressures and create a more resilient, profitable business”.

The Paper division has also seen the launch of James Cropper’s FibreBlend Upcycled Technology programme, which offers a wide choice of different recovered fibre categories. This builds on the company’s CupCycling proposition, which was established to give a second life to used coffee cups.

Challenges in the division 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: “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 focusing 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.”

James Cropper said Colourform maintained a strong sales pipeline and saw revenue growth of 29%, driven by new market launches in the luxury drinks and cosmetics sector with brands such as Perrier-Jouët and Lancôme.

Elsewhere, Technical Fibre Products (TFP) generated an adjusted operating profit of £9.2m compared with £8.7m in the prior period. The company said TFP Hydrogen continues to exceed expectations with a new Hydrogen plant in New York replicating the successful UK site.

Meanwhile, following a comprehensive feasibility study, a 40% lower capital investment is now required to deliver James Cropper’s decarbonisation programme that will result in being operationally carbon neutral by 2030 and net zero across the entire supply chain by 2050.

The business has achieved a 16% reduction in its carbon footprint in the last year and said it is also making progress on the ambition to use 25% less natural gas by 2025.

James Cropper also reported net debt of £16.6m, up 35% from £12.3m in 2022.

The company’s earnings per share were down 62% to 5.4p (2022: 14.2p), while its full-year dividend proposal of 6.0p per share (2022: 10.0p) was in line with expectations.

Its share price was effectively flat, down by 1% to 712.60p at the time of writing this morning (52-week high: £10.98, low: 560p).