In a trading update issued today (8 March) the Cumbrian paper and hi-tech materials maker said that profit, prior to exceptionals, for the year ended 27 March 2021 was expected to be “above £3.5m” on sales of around £77m. 

“This is an improvement from previous market expectations and includes around £2.9m of the Coronavirus Job Retention Scheme and Paycheck Protection Program government schemes,” the PLC stated. 

The group said that since the half year trading had improved, and the restructuring measures made to cope with the affects of the Covid-19 pandemic – in particular at its paper division – were now complete.

All of its divisions were affected in some way. Colourform's rate of growth was “impacted by a pandemic related downturn within the beauty and spirit sectors”, although sales are still expected to be up on the prior year.

James Cropper said its Paper division “endured the biggest impact from the pandemic as a result of global lockdowns affecting demand for luxury packaging, education and event collateral”. 

Sales slumped by 45% in H1, “with the reduced demand leading to periods of inefficient or no production. 

“Revenues in H2 have improved but expected to be 20% down compared to the comparable period last year.”

James Cropper said it had good headroom against all its banking covenants and was in a “strong financial position” with liquidity of over £18m from cash, overdraft and other available facilities, including a £4m CLBILS loan. “This is expected to be sufficient for the Company to return to more normal trading conditions, to invest and to emerge from the pandemic stronger.”

Major capex activity was suspended in H1 due to the pandemic, but work on installing an additional production line at the Technical Fibre Products (TFP) operation is now underway again,  and is expected to be complete this summer.

Shares in James Cropper rose from 1,100p to 1,190p in early trading, but then settled back to 1,100p. (52-week high: 1,445p, low: 580p.)