James Cropper plc (LON:CRPR) Chief Executive Officer David Stirling and Chief Financial Officer Andrew Goody caught up with DirectorsTalk to discuss the Group’s financial highlights, progress against its refreshed strategy, growth in Advanced Materials, the recovery of Paper & Packaging and its outlook for the coming months.
Q1: First off, congratulations on a strong set of results. Could you just talk us through the financial highlights?
A1: Well, it’s certainly very simple. Our revenue was up 4%, our primary profit measure is EBITDA, adjusted EBITDA, up 33% from £6.7 million to £8.9 million and we have repaid almost £5 million of debt, leaving us with just around £8 million of debt on the balance sheet, which is less than one times EBITDA leverage.
Q2: Now, this year has been about delivery against your refreshed strategy. Could you just comment on the progress that’s been made across James Cropper?
A2: The refreshed strategy looked at three elements; the first one was to grow Advanced Materials, the second one was to stop the Paper & Packaging business losing money and the third was to improve the health of the balance sheet.
With Advanced Materials, we grew 11% in the year. It was largely concentrated in the performance of a few customers, but we’ll take that in the short term. In the longer term, we want to improve the spread of growth across the business.
Paper & Packaging, we did really well. We had a bit of a tough start to the year, with a major customer deciding they wanted to source elsewhere, but the Paper business responded really well. We came through with revenue at a similar level to last year, and profit meaningfully improved from the significant loss in the previous year to, although still a loss in the year, the second half of the year being positive, giving us very good momentum coming into the current year.
On the balance sheet, we instigated very strong capital disciplines on working capital and capital expenditure, we sold off some non-core assets and ended the year, as I said, with net debt at less than one times EBITDA.
Q3: You mentioned Advanced Materials. You delivered record revenues, with strong growth across key markets. What was driving that demand?
A3: It was a mixed picture. In some markets, it was a little bit difficult in the year and in some markets, customers performed very well. So, it was really on the back of a few key customers. So, thank you to them.
We are looking forward to getting the business to a much wider spread of opportunity growth over the next few years.
Q4: Now, in Paper & Packaging, you returned to EBITDA profitability in the second half, as you said, despite the challenging conditions. How has that been achieved?
A4: Primarily, with the same revenue as last year, it’s been driven by cost and operating efficiencies. So, we have lower headcount, we have the right shift patterns, we’re using energy more effectively and we are buying more effectively. So, the combination of all those together has really improved the profitability.
Q5: Finally, what can investors expect from James Cropper in the coming months?
A5: Well, the analysts’ numbers in the market show continued revenue growth and continued progress on our profitability, EBITDA. Andrew has delivered a refinancing of our debt position, so that’s much more solid going forward.
I think there will be more of an emphasis on Paper in the short term this year, being the driver for our growth position and over the medium term, we’ve got a more solid balance sheet, and actual growth opportunities right across the business in Advanced Materials and in the Paper business.
