For the 52-week period to 30 March 2024, the UK paper and specialist materials manufacturer’s board said the outlook for FY 2025 is also encouraging, with a return to growth expected across both its Advanced Materials and Paper and Packaging businesses for the full-year.
Accordingly, the company’s share price had jumped by around 30% on yesterday’s close at the time of writing just before lunchtime today, to 344.60p. However, it is still way down on its 52-week high of 960p, achieved nearly a year ago, but above the 52-week low of 212p earlier this month.
The Advanced Materials business saw a year-on-year contraction in revenue, primarily reflecting the slowdown in fuel cell market demand. This was partially offset by growth in the hydrogen electrolyser business where, despite the delays to expected projects reported in January 2024, the business continued to acquire new customers through trials and specification development with electrolyser OEMs.
James Cropper said targeted capital investment has continued in the business to support customers, enhance efficiency, and ensure the Advanced Materials business remains well positioned to meet the expected future growth in this area.
The core (non-hydrogen) Advanced Materials business was underpinned by growth in the aerospace and automotive sectors. The focus remains on delivering growth in these sectors, as well as carbon capture, batteries and other renewables, and defence.
The mid-term outlook for both the hydrogen and the core business remains strong.
The board said a new managing director has also been appointed for the Advanced Materials business, who will join the group at the end of July 2024 and be based at its main site in Burneside. More details will be revealed following notice period restrictions.
Within the Paper & Packaging business, James Cropper said supply chain destocking compounded by the impact of high inflation on consumer confidence continued to be felt through the second half of the year.
Despite volume pressures, it said customer retention remained high as the business benefits from strong relationships at the channel, converter, and end customer levels. Lower input costs (energy and carbon tax), mix improvements and productivity initiatives, as well as maintenance of strong average selling prices, are helping to protect margins.
Planned restructuring activity was completed during the third quarter of FY 2024 on schedule, and work is ongoing to optimise the new operating model, the company said. The future project pipeline, meanwhile, is encouraging and forward indicators, such as order intake, point to early signs of market recovery throughout FY 2025.
The group also said that it has “managed its working capital and capital expenditure robustly”, both of which are lower than the previous year, resulting in a better net debt position at the period end than previously expected.
It also said it has continued to operate in compliance with its banking covenants throughout FY 2024. Following the challenging trading conditions reported in the second half of FY 2024, the group is currently seeking temporary covenant adjustments on its UK banking facility to ensure sufficient headroom is retained. Discussions with banks have commenced and it said a further update will be provided in due course.
James Cropper CEO Steve Adams said: “I am pleased with the response from our whole organisation to the challenging trading environment over the second half of the year.
“Our priority has been a relentless focus on business development, leveraging our strong product and technology offer. We have addressed the drop in volumes by protecting our pricing, delivering continuous improvement in all our operations, driving down input costs and maintaining tight cost control.
“The Advanced Materials business has continued to strengthen its technological leadership whilst maintaining strong customer relationships, as well as building world class partnerships and identifying future accelerated growth opportunities.
“The Paper & Packaging business continues its focus on driving value growth through operational effectiveness and building on its strong brand and capability leadership in luxury packaging.
“As a group, we have remained 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.”
The group’s audited results for FY 2024 are expected to be announced in July.
